PFI is dead - long live PFI!

Scottish Ministers are fond of saying that Scotland is being "set free from the shackles of PFI". Sadly this misrepresents the continuing widespread use of private finance in public infrastructure through a range of PPP models. It's an old trick of political spin to change a name or two, but it's substance that matters.


Despite vociferous criticism of the previous administration's use of PPP/PFI, the Scottish Government is planning one of the largest PPP programmes in Europe. Ministers avoid using the acronym PPP, although officials when pressed do own up.


Instead they refer to NPD (Non-Profit Distributing Trusts). The NPD model is simply a cosmetic change to existing PFI schemes. It retains the higher borrowing costs, private profit at the contractor level and elements of the risk transfer costs all leading to the same profiteering and inflexibility inherent in PFI.


The other rebranding is called the Hub initiative, which uses Design Build Finance and Maintain (DBFM) PPP contracts for „community facilities e.g. health centres, schools, police & fire services. The Hub initiative is based on the English Local Improvement Finance Trust (LIFT) health PFI scheme. Also, waste infrastructure contracts are based on English PFI ones and the National Housing Trust is a form of PPP.

So why are we returning to PPP via this elaborate political spin? To be fair these PPP schemes are better than their predecessors, but that would be true of every private finance scheme as the procurement staff learn lessons, at the taxpayers expense. The real reason is a complex mix of off-balance sheet financing and the relentless chase for the free lunch. Enron economics are alive and well in Scotland.

What's the alternative?

• PPP/PFI contract buyouts that produce savings. A 2011 SFT review didn't calculate potential savings because, it said, "termination would bring assets back into the public sector for accounting purposes and the capital budget required for this is not currently affordable". In other words Enron economics.
• Prudential borrowing for health boards to plug the biggest gap in the conventional borrowing regime.
• Provide a genuine level playing field, with Scottish Government funding support offered to new projects irrespective of the proposed method of procurement.
• Extend Freedom of Information laws to all companies and other bodies providing public services. The capacity to effectively scrutinise the true costs of PPP is essential.

The bottom line is that every objective analysis and countless parliamentary reports all show that private finance is less flexible and more expensive than conventional borrowing. But weaning politicians off it is proving very difficult indeed.

Scottish Living Wage

I was giving evidence yesterday to the Scottish Parliament Local Government and Regeneration Committee as part of their living wage inquiry.

It can be argued that there has been a greater focus in recent years on tackling poverty in families with children and older people than those at work. The living wage is a key element in tackling poverty for those at work and the Scottish Living Wage Campaign has been at the forefront of efforts to extend this concept in Scotland.

The living wage is intended to provide a level of pay that adequately allows workers to provide for themselves and their families. The current rate in Scotland is £7.20 per hour. This is paid to staff in the direct employment of the Scottish Government including the NHS. Seven local authorities have adopted the Scottish Living Wage, most notably Glasgow that has also encouraged a wider take up in the city.

This still leaves 18,432 workers (7%) in local councils who are paid below the living wage. There are also around 350,000 workers in Scotland earning below this level including many in the private and voluntary sector who provide public services. For this reason the committee focused in my panel on how we can expand the coverage of living wage.

Some local authorities claim they can't implement the living wage because of single status and equal pay. This is simply an excuse for inaction. The easiest way to implement is by collapsing increments at the bottom of the scale as in NHS Scotland. While this may impact on differentials, it doesn't of itself create an equal pay claim. The other is by a top up payment that might create a theoretical equal pay claim. However, there is a Genuine Material Factor defence that can be objectively justified on several grounds. 

Expanding the living wage to the voluntary and private sector can be done through procurement. Legal advice to government and councils has highlighted the risk of challenge under EU procurement rules. Again there are ways of addressing this following the example of London and other councils elsewhere in the UK.

Finally, all those giving evidence emphasised the importance of establishing a Living Wage Unit. It could promote the living wage, give advice on the perceived barriers and provide practical support to public and private sector bodies that recognise the value the living wage brings to their organisation and the wider economy.

In all a very good evidence session and I hope the committee brings forward some positive recommendations.

Scotland and human rights

Last week I attended a lecture and dinner with Shami Chakribarti, Director of Liberty, at the University of Edinburgh. Her theme was 'A man's a man for a'that - Scotland and the Human Rights Act.

Her main point was that it's easy to sentimentalise Scottish, British or "western values" as if they always came easily or as if people around the world don't also strive for dignity, equal treatment and fairness. At a time when many at Westminster seek to replace universal "human rights" with "British rights" or citizens' privileges, she encouraged Scotland not to follow this trend. In this shrinking interconnected world, we should not choose to be citizens somewhere but rather human beings everywhere.

A key target for her concern was the proposed Bill of Rights for the UK, as against the universal rights that were developed after the carnage of the Second World War. She highlighted three specific concerns:

• Attacks on the European Court of Justice in decisions such a prisoner voting. These attacks fail to understand that the ECHR is now integrated into our system of justice. Not forgetting the irony of attacks on judges from those who preach the rule of law to others.
• Judges overturning the decisions of elected representatives. Most democratic states recognise that there have to be underpinning rights that protect people against arbitrary law making. Those advocating a Bill of Rights should also recognise that in jurisdictions that adopt this model, judges tend to be much more interventionist and powerful.
• That we risk only giving legal rights to the 'worthy citizen' as against the principle of equal treatment. Deportation and immigration cases illustrate this point well.

There is a perception, at least from an English angle, that Scotland is more relaxed on these points. A less excitable tabloid press certainly helps and Shami argued that she was optimistic because people across the UK are generally supportive of essential human rights. The problem is a perception that they are OK for us, but perhaps less so for others. Immigration cases reflect this point.

I am not convinced that Scots necessarily take a more positive view than the rest of the UK and I illustrated this with some examples from my own experience of anti-racism work. However, I do believe that we can win the argument that Scots are human beings before we are citizens.

Shami did touch on some topical Scottish issues. A concern that the benign Scottish influence over human rights might be lost if Scotland became independent. Either way she hoped we would support human rights not Scottish rights, whatever our constitutional future. She also warned against 'dangerously broad' definitions of speech offences in the proposed football offences legislation. She accepted that the objectives of the Bill are laudable, but experience of speech offences is that they must be closely defined. The broad anti-terrorist legislation provisions of 'glorifying terrorism' as against the clearer incitement to murder or racial hatred. 

The evening was a timely reminder for me of the importance of our human rights framework. Human rights standards and principles apply to each of us equally. Compliance with these rights should be mainstreamed in the design and delivery of public services. they can be used as a tool to argue for better and fairer services. The work of the Liberty and the Human Rights Consortium Scotland  in highlighting these issues deserves support.

Politics of the pensions dispute

Last month I posted some reflections on the politics of the current pension dispute. After yesterday's historic strike I believe some update is warranted.


The ConDems got themselves in a guddle from the outset. Firstly, we were told the strike will ruin the economy costing £500m and then it was all a damp squib. Self evidently both cannot be correct. Of course it was only a damp squib if you view the world from the No.10 bunker or your normal social circle of bankers and hedge fund managers. For those in the real world it was an amazing day of protest for pensions justice, as the pictures alone show so clearly. The Autumn Statement the day before just added fuel to the fire.

For the SNP they started with a clear political strategy that deftly avoided the Scottish pensions tax for staff in the LGPS (Scotland) when it became clear there were no Barnett consequentials. They could have used some of the additional £675m efficiency savings to offset the consequentials from the NHS and other schemes. However, they made the political judgement that this money could be better used elsewhere, with the big added advantage of being able to blame Westminster. It will all be fine when we are independent. Treasury 'cash grab' was the soundbite, we actually used this first, but that's fine because that's exactly what it is.

So far so good until Labour MSPs decided to oppose business in Parliament on the Day of Action. The SNP then made a poor tactical decision to hold another debate on pensions (they had one only 10 days before) that meant crossing picket lines. John Swinney, I suspect unintentionally, gave the impression that he was boasting that he crossed a picket line. Then very awkward pictures for the First Minister at the Scottish Parliament picket line. This all went down badly and at the Glasgow rally, when that picture went up, he was loudly booed by most of the 2000+ people present. A rare experience for the normally politically astute FM.

Trade unions broadly welcome the Scottish Government's support for the campaign, but yesterday was about solidarity on the streets and picket lines, not posturing as part of a referendum strategy. A number of mainly West of Scotland SNP MSPs would understand that, but other colleagues clearly didn't.

As for Labour. Well at UK level they started by falling back into the New Labour trap of worrying about being associated with strikes. They just didn't get the scale of this strike and as a consequence sounded like Kenny Dalglish on a bad day - maybe yes, maybe no. In fairness, Ed Miliband redeemed himself somewhat at Prime Minister's Questions.

Scottish Labour generally played a blinder. Ian Gray's measured arguments in favour of showing solidarity went down well on the media and with those taking action. He was supported by many MSP's on picket lines and rallies. Yes, of course the Labour Leadership candidates had an interest in attracting votes, but they didn't make the judgement call. Most of them simply reflected the mood of the Party.

So, the scores at the end of the day. ConDem's nil - didn't even try. SNP 1, for getting the principle but let down by poor tactics. Scottish Labour, full marks for not only making the case, but for being out there showing solidarity when it matters.