Schools PFI
John Swinney, SNP Finance Minister, has written to the Comhairle declining to meet with them to discuss the schools Is this a good thing or a bad thing?
On balance, I think it is a good thing.
Before the election Labour scaremongered that the SNP would cancel the contract and the schools wouldn't get built. The SNP countered that they would abide by the plan.
IMHO, they were both wrong.
Basically PFI (if you are a Tory) or PPP (if you are Labour) amount to the same thing. A private contractor builds the school and rents it back to the Comhairle. With lots of clauses to protect the guaranteed income stream over a 30-year period. At this point you might want to remember the successes of PFI/PPP at both the Skye Bridge and Inverness Airport.
The business model is like this. You ask me to build you a house, I am awarded the contract, and we agree a fixed price. I add lots of additional clauses, and you have no other builder to turn to as the mortgage company want you to build regardless.
After you move in, you find that you are due to make extra payments in addition to your rent. Every time there is a change in personal circumstances lo! and behold! there is an additional charge. "New baby", extra occupancy charge. "Away on holiday", under occupancy charge. "Death in the family", commiserations but the contract says....
The Comhairle will find itself tied into a 30-year lease of schools which may be half-empty in 15 years, and which need rationalisation (i.e. closing), yet still be liable for enormous sums in rents on the empty schools. Which business would take a 30-year lease on fixed terms without the ability to walk away? A possibility that the Government had ruled out, until now.
Add to that the fact that the cost of building the school will be require a commercial return to the builder, with risk premia built in, and will undoubtedly be much more expensive than the public-sector equivalent. That is until the "consultants" (paid for by the Government tell you otherwise.
From the Comhairle website:
Originally, the schools selected were The Nicolson Institute, Sir E Scott School, Barvas and Airidhantuim Schools and Bayble, Aird and Knock Schools. These were chosen due to a combination of the state of the buildings, falling school rolls and over provision of school buildings for the West Side and Point areas. Balivanich School was added to the project in 2005 after it was severely damaged in storms at the beginning of the year.
"Falling school rolls" and a fixed term contract? What to population projections for these areas tell you? Smaller schools? Flexible provision?
More tellingly:
The project team awaits confirmation of what, if any, impact the new Administration in Edinburgh will have on the project.
Cancel it now, and start the whole process of the root and branch review of educational provision in the Western Isles from scratch, but do it quickly, and merge some schools, at least until the population starts to grow again.
PFI/PPP is a through into which the financiers are diving, and which we should have no part of.
4 comments:
Both PFI and particularly PPP are dangerous. Not just because they end up costing more than they should ... but also the work tends to be of a lower standard and it also tends to go outside the community...there is NOTHING to recommend PPP in the long term.
"You ask me to build you a house, I am awarded the contract, and we agree a fixed price. I add lots of additional clauses,....."
Hmmm, surely these clauses wont have any legal standing given that they are added AFTER the contract is signed? Is it not more likely that such onerous clauses were in the contract when you signed them but you didnt understand their implications?
The problem is that you agree to go down the PPP route ("It's the only game in town") then you are committed. The funders (the Government) tie you in and then you finish the negotiations with the developer, some time later. Much sucking of teeth, and "extras" which the - now - preferred bidder has you over a barrel on.
You can't walk away, as you have promised to go down the PPP route and the schools will get no Government funding if you pull out, and you have dismissed all the other bidders, who know exactly how the game works.
It's not bad negotiations, it is that the whole principle is weighted against the public authorities. Surprise, surprise, but it was devised by the private sector and sold to the Tories and adopted by NuLabour.
As the SNP said in 2001:
"It is now clearly understood that PFI is hugely expensive, but what is worse is that not only do you pay more, but you get less for your money. The catalogue of problems with PFI-schools is staggering. Ceilings have collapsed, roofs set on fire and medical checks offered after potential exposure to asbestos.
"Corners are being cut in order to provide private profit. Instead of providing the best, PFI schools provide the minimum. Classroom sizes have fallen and facilities, such as swimming pools, lost.
"PFI robs our children of the facilities they deserve and saddles them with a multi-million pound bill they will be paying for decades to come."
So what has changed?
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