SCOTLAND’S staggering PFI bill will eventually cost more than four times the actual value of the schools, hospital and roads built under the hire-purchase like scheme, according to a new report.
Audit Scotland said the Scottish public sector has paid £13.1 billion in annual payments for a total of 136 projects under contract under three models since 1998-99 and will pay a further £27bn between now and 2047-48.
The private finance models are Private Finance Imitative (PFI), introduced by Labour, and the Non-Profit Distributing (NPD) brought in by the SNP.
While successive governments have known these models are more expensive than other forms of funding, they allow huge levels of investment by spreading the upfront cost and transferring some risk and responsibility to the private sector.
The public sector makes annual payments to cover the cost of financing, building and maintaining the assets.
Scotland’s Auditor General, Caroline Gardner, warned of the “significant” impact on future budgets.
The report said more transparency is needed on the rationale for choosing which projects are financed in this way and how the mix delivers a balance of cost and benefits.
It calls for the Scottish Government to learn lessons from the use of NPD when introducing future models by increasing public reporting and using clear criteria to better demonstrate how value for money is achieved.
The report also warned of the possibility of private companies profiting from new contracts, despite moves to limit this after concerns over PFI schemes.
Gardner said: “The Scottish Government has accepted the costs of using these contracts to increase total infrastructure investment.
“But the impact on future budgets is significant, as is the overall amount of money that will be repaid.
“With the introduction of the Mutual Investment Model, the Scottish Government has an opportunity to be clearer about the additional costs of investment associated with using privately financed contracts for specific projects.”
The Greens accused the Scottish Government of relying on “extortionate private finance contracts to hide its debt”.
A Scottish Government spokesman said: “The Scottish Government no longer uses any of the private finance mechanisms covered by this report.
“As the report recognises, NPD and private financing through hub companies has enabled £3.3bn of additional investment in Scotland’s infrastructure that would not otherwise have been possible, given budgetary constraints placed on the Scottish Government by the UK Government.”
There are currently 80 active PFI and 15 NPD contracts.
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules hereLast Updated:
Report this comment Cancel