It’s Time to Open the Books on PFI

edinburgh schools scandal

Oxgangs Primary School, Edinburgh

“It’s not been great, has it?” is a common refrain I’ve heard about this election campaign.

The General Election last year had a certain insurgent, watershed-moment dynamic that this campaign was never going to replicate. However, we probably all thought that there would be something more interesting than political interviews by Gary: Tank Commander to keep us all engaged.

The danger is that when this campaign finishes on Thursday, it’s only the start of a new settlement in Scottish politics that bears little fruit. The fear is that we whinge and counter-whinge over the finer points of SNP domination. Meanwhile, the political bubble – massively enlarged by indyref – turns in on itself, in a futile but furious pursuit of petty point-scoring.

Witness #DandyGate. It’s less than a week until an election, and the reaction and counter-reaction to a spoof-that-wasn’t has kept many activists busy on social media for 24 hours.

Maybe I’m just the overly-serious, grumpy one. But weren’t we supposed to spend elections talking about, I dunno, real stuff?

It’s not like nothing has happened over the past couple of months. ‘Dodgy Dave’ was exposed as up to his neck in the tax avoidance/evasion scandal sparked by the #PanamaPapers. How quickly that came and went, but it appeared to hardly even make a dent on the Scottish elections. Like there’s no super-rich north of the border who are hiding their money offshore.

The media haven’t helped. I attended a BBC audience debate on tax two days after #PanamaPapers broke. The first question was about whether we need a tax justice revolution in Scotland. Only two politicians answered the question, before the presenter happily moved the discussion onto the finer points of the SNP’s council tax changes. Our parochial political culture, framed by the media, is stifling.

But us activists could probably do a bit more to put big issues on the agenda. If we don’t question who holds real power in Scotland, why they hold and what can be done about it… What else are we going to spend the next five years doing?

After the EU referendum, there’s nothing in sight between here and the General Election in 2020 and Scottish election in 2021 (sadly, I don’t count the Council Elections next year as a major political event). I don’t know about you, but I got bored of faux-social media scandals about a year ago. The idea of that being the focal point of Scottish politics for the next five years is depressing at best.

So at Common Weal we thought, rather than whining about it, let’s try and do a bit of campaigning work on a big political issue in Scotland – one that, in our view, exposes power and how it works in modern Scotland.

The Edinburgh Schools Scandal was a very, very bad PR day for PFI – and a very big opportunity for activists who want to challenge the shady aspects of elite profiteering in Scotland. Endangering children is not a good look. So let’s take advantage of it.

The Private Finance Initiative in some ways gets to the heart of what ‘neoliberalism’ – that famous concept with the ugly title – actually means in practise. Which is, simply put, that the state changes its laws and regulations to give the private-sector free reign. PFI is hyper-capitalism: let the rich get richer, and make taxpayers foot the bill.

When you get into the figures of the cost of PFI to future generations of Scottish taxpayers, it is eye-watering. The public-sector is paying consortiums of banks and builders up to five or six times the build-cost in debt repayments.

And now we know what many always suspected: the consortiums got greedy and cut corners, with schools in Edinburgh and Glasgow built without even fitting the standard ‘wall ties’ used on such buildings. Kids’ lives have been endangered in pursuit of maximum profit.

This is a genuinely cross-party issue. It started under the Tories, was accelerated massively by Gordon Brown under New Labour, and a new version of public-private contracts (with some of the excesses curbed) is now in place under the SNP. PFI may be dead in Scotland but its birth-child remains. The costs continue to pile up – just not quite as quickly as in the past.

We don’t quite know how bad the debts are, or how poor the quality of the building regulations are, because the detail of PFI and PPP contracts are kept secret. This is another key feature of the neoliberal era. Secrecy for the super-rich; surveillance for the rest of us.

So we’ve launched a petition with People Vs PFI and Jubilee Scotland to Open the Books on PFI/PPP. Transparency is, we believe, the first step to being able to legally broach the issue of debt cancellation/renegotiation.

On Tuesday May 3rd, 7.00pm, just two days before the election, we’ve got a public meeting in Edinburgh to discuss it. Speakers include economists Jim and Margaret Cuthbert, who have been researching public-private contracts in Scotland; and Edinburgh-based architect Malcolm Fraser, who has spoken out against what he saw at the time as the shoddy building standards of PFI schools in Edinburgh.

A lot of people interested in this sort of thing won’t be able to make it as they’ll be knocking doors for their respective party. Fill your boots. But we felt it was important to put this sort of event on as a marker for the future.

Despite the tone and texture of this election campaign, we believe that afterwards there’s still lots of us who want to put aside party allegiances, and get down to the gritty work of challenging the corporate-state nexus of neoliberal power in modern Scotland.

I know there’s many people, in political parties and none, who will agree.

Ben Wray (@ben_wray1989) is head of policy & research at Common Weal

If you are attending this event, please carry on the conversation in our comments space below

Comments (31)

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  1. Alex Beveridge says:

    “Sadly I don’t count the Council Elections next year as a major political event”.
    Well, you may not think so Ben, but there are many of us activists who are raring to go, and to clean out the muck that is the Labour controlled councils, who, by their nefarious practices over many years, have denied the people of Scotland a fair deal. So for some of us next year’s elections are a “big deal”, and we’ll be working as hard as possible to achieve our aims.

    1. Ben Wray says:

      Okay Alex – so what after that? My point is electioneering is not going to provide sufficient fuel for the next five years to keep the energy created from the independence referendum going.

  2. Edward Harkins says:

    I rarely ever find myself recommending House of commons Select Committee reports. In the case of PFI, however, the exception must be made. There has been a whole series of severely critical reports produced by the Public Accounts Committee (PAC or @CommonsPAC ). The findings of the Committee have constituted an almost seamless stream of failings – failings in almost every dimension whether cost, or design quality, or procurement efficiency and effectiveness or innovationary practice (the latter was heralded as to be a major benefit of giving the private sector the lead role under PFI projects in the public sector).

    It all raises the question of why in the face of this long accumulating evidence has this model been continued with (including in its ‘restructured’ successor PPF)?

    1. Pat Kane says:

      Links to documents, Edward?

  3. Edward Andrews says:

    What I find annoying about this article is that while I agree with much of what has been said it seems to forget one thing. Activists are now being active we are knocking doors and posting literature. This is the time when activists live up to their name.
    You may write off the Council elections next year but we will still be out there being active. After Friday is the time when we can give thought to policies, and how we get discussion on the go about the very things you are harping on about.
    Why not start the thinking season with a shopping list of areas which we could debate and take to our respective conferences. I don’t live in Edinburgh so I couldn’t get to the meeting ay way, but if I did I rather think that I would be spending the evening of 3rd May doing something for the election rather than at a meeting no matter how worthy the topic and how distinguished the speakers.

    1. Ben Wray says:

      That’s why I said “fill your boots”. I get it, there’s an election on and folk are rightly committed to campaigning for votes. I’m just laying down a marker for afterwards. Ben

  4. Doreen Milne says:

    ‘Witness #DandyGate. It’s less than a week until an election, and the reaction and counter-reaction to a spoof-that-wasn’t has kept many activists busy on social media for 24 hours’

    From what I could see only some folk spent time bothering about it. One glance at a few other commentators pieces would soon have sorted that out.
    I feel the Council Elections next year are incredibly important as they will be the representatives managing local services based on our next Governments budget.
    As it looks like we will have another SNP govt. then it will be crucial to have liked-minded Councillors that, hopefully, will be able to implement budgets without too much detriment to services.
    ‘austerity’ has already cut so deeply into many essential service providers, we need better management at local levels.

  5. Craig Miller says:

    SNP last ditchers still trying to claim it WASNT an endorsement of the SUN , these are unprincipled devolutionists who have NO INTENTION of working towards a second fruitless referendum , they have thrown one referendum with their deliberately anti nationalist strategy , “lets all just smile and be “hippy democrats “, while the collected sinister forces of the british state demolish our dreams ” next time i vote will be when there is a party who has INDEPENDENCE on their front cover …i wont endorse any more british politicians like Nicola

    1. East Neuker says:

      What is that about? It makes no sense.

    2. RabMacPhoto says:

      Sorry, you’ve lost me there. What exactly are you trying to say?

      1. David Allan says:

        Craig is merely articulating a little frustration , with polls showing 47-50% support for Independence, with all but three Westminster Seats , predictions of another majority in Holyrood , the SNP leadership do not demonstrate the confidence to make a sufficient case for Independence second time round , do they not believe that such a case would take us over the line.

        If a 51% Brexit vote takes us out of Europe what’s the problem with a similar margin taking us out of the UK.

        This “once in a generation” comment made by Alex Salmond has become a noose round the SNP’s neck. More confidence in our country and it’s ability to thrive . SNP needs energising less hesitancy on the second referendum.

        1. RabMacPhoto says:

          You can’t see the risk in calling Indyref2 too soon, and with such a narrow margin? What do you think happens if No scrapes in by 50.1 – 49.9%? You just keep on trying until the numbers turn in the other direction?

          Indyref2 is going to be hard enough to call for with WM challenging its legitimacy, never mind 3,4 or 5!

  6. Duncan McLean says:

    Two points:

    1 PFI was promoted by consultants either working directly for the government or embedding ‘advisers’ in the offices of key MPs in the Labour and Conservative parties. Is it any surprise it turned into a cash cow for those same consultants and their key customers in financial services. The insertion of dividend bearing equity into the model meant each project could be sold and increasingly leveraged, putting pressure on new owners to find ways of screwing more money out of the client. That is one of the reasons why the new NPD (non profit distributing) model is fundamentally different.

    2 Of course the council elections are important. Never again should we find ourselves in the position where the established party of government in Scotland takes our mandate and hands us lock stock and barrel into the far from tender embrace of a Tory Government. That fight starts in communities and local authorities. If we want to prove we can do things differently in Scotland let us set about doing that from the bottom up. There are vested interests to be challenged that are holding us back. The disgrace of Labour and TU collusion to resist equal pay, and GMB Scotland backing Trident on spurious job protection arguments won’t go away on their own. The SNP and Greens are right to focus on renewable energy as a new engine for industrial Scotland. Leaving local authorities in the hands of reactionary and self-interested representatives of Better Together would represent a setback in the process of change and it is time those who call themselves ‘radical’ and ‘an activist’ recognised the need to challenge our political opponents at every opportunity. The SNP took that decision years ago, which is what built the party that delivered the referendum and took us to the brink of independence.

    Keep up the good work.

  7. Alf Baird says:

    “we don’t question who holds real power in Scotland”

    Good question, and I’m not sure the answer lies in Holyrood (far less council chambers).

    On PFI, amongst various interesting areas of investigation would be: (1) the amount of fees and bonuses paid/still being paid to bankers, lawyers, accountants etc behind these deals; (2) the civil servants/public officials who signed the deals on our behalf, and their ‘motivations’; (3) the contractors/builders.

    In addition, PFI type deals have been/are also used for other forms of public ‘infrastructure’, e.g. ferries.

    1. John Page says:

      ………and how many former civil servants now work for accountants, banks or PFI investors?

      1. Alf Baird says:

        To be sure, John…..and Serco, and the offshore ‘private equity’ owners of our airports, ports etc etc etc

    2. David Allan says:

      PFI used for some new build prisons , hope the walls don’t collapse! . And then there are the Hospitals.

      Holyrood Project , the Trams , now PFI scandal there is a dose of mediocrity among civil service it’s long overdue a clearout minus the golden hand-shakes and pension pots.

  8. Legerwood says:

    It was not just schools in Edinburgh and Glasgow that were missing ties.

    In January this year the same storm that same storms that blew down the wall at Oxgangs Primary School also blew down a wall at Balfron High School which was one of the first schools in Scotland built using the PFI model. Not much was made of the collapse at the time but it now transpires that the wall was missing ties. Furthermore one of the internal stairwells has been cordoned off because it is not stable.

    As to the Council elections they are important but under the STV voting system can you actually get rid of councillors? STV has always struck me as a ‘sweeties for all’ system but I am prepared to stand corrected on that.

    1. Wul says:

      It’s not just the quality of the physical buildings that suffers under PFI.

      When my son went to Balfron High to take swimming lessons, I complained about the various slot-machines in the lobby selling Mars Bars, Coke, Energy drinks, Crisps & other junk.
      A member of staff told me that several parents had also complained, but the vending machines were part of the lease contract with the builder. The school and local authority could do nothing about it. Think about that for a moment.

      Not only do the rentier class get rich from building sub-standard schools, they also get rich selling our kids junk to make them ill.

      Hey Folks! Cheer Up. It’s “The Market”

      1. Legerwood says:

        Actually I am not at all surprised. With PFI it is the consortium who own the building and they dictate how it is used. In one school that I know off there are no signs on the doors for any of the toilets! The architects for the PFI group thought they spoiled the overall look of the building!

        In hospitals it is no better. If they want to close a ward and convert it to another use then they need to get permission. Hopefully they would get that permission because over a 30 year lease the practice and delivery of medical care may change dramatically and require changes within departments.

  9. Màrtainn says:

    Great this is being raised, sadly I won’t be able to attend tonight’s discussion.

    One thing to note regarding making hay versus PFI through the Edinburgh school fiasco is that the cause of the wall collapse, ie. insufficient brick ties, is unlikely the result of profiteering no matter how terrible the PFI contracts are. The ties are not a costly item and nobody is rolling in cash off the back of missing a few out. The real difficulty here goes beyond the contract type and to the heart of our ‘culture’. The attention to detail, pride in their work and care taken by workers on site leaves a lot to be desired. I have been appalled at the attitude of Construction Workers on site, childish antics disregard for their own safety and that of their co-workers, disinterest in the quality of their work. In my view there is more at work here than contract types and this type of carelessness and lack of care goes to the heart of how much we value the non academic trades as a society.

    (Though in a Traditional Contract there may have been more oversight of the work on site by an Architect or clerk of works…)

    1. David Allan says:

      Mediocrity is rife throughout these projects and it cascades from the very top down , it’s easy money luvvly jubbly !!!

      The tax payer gets easily shafted and all responsible know they will remain untouchable. Too many checks taken out of construction equation in favour of cost effectivness. PROFIT FIRST.

      The game of KER – PLUNK where all the marbles are held up by straws . Developers, Business leaders remove the straws (each deemed an unnecessary overhead/cost) all over the marbles are now held up by the bare minimum ! Greed however will demand yet another be removed!

      The Financial sector are not alone in fleecing the tax-payer. And we have TTiP round the corner. Will we ever learn ?

  10. w.b.robertson says:

    Local councillors loved PFI schemes. They did not know how they worked and they did not want to know. But it enabled them, at election time, to point out the shiny new schools etc that “they” had fought for and won for their wards. That was the way it was sold by council leaders to their ruling political “groups”. No one (including any journalist) could ever find out the real costs or how the schemes were negotiated with the “leaders” cause it was all officially branded as commercially sensititive. No council chief executive or treasurer on their six figure salaries (plus pensions and perks) were going to rock any boats. By the time the bills came in the councillors hoped to have moved on. And some would have grown rich in the process.

  11. douglas clark says:

    I suggested, ages ago, the Gordon Brown, yes, that Gordon Brown, had, within the confines of the prison that he had constructed for himself, found a way to preserve some elements of the Welfare State, though at a cost that one would only usually expect to involve: midnight, the Devil and crossroads.

    He knew that the Labour Party was heading for annihilation. He knew he could not truly expect to win an electoral advantage, either as Tony’s number two or as a lame duck number one.

    What is it that they say? No government can legislate in a way that the next government cannot undo?

    Gordon Brown did though through contract law. These deals are in place at a huge cost for a long time.

    It is not going to be easily disentangled, especially as the benefactors are the supporters of the new government.

    He probably saw it as very clever, a legacy from him to the future.

    Personally I prefer the idea of the private sector building things for a price and to a standard and being paid for that. This ludicrous business is all because PFI deals were not sh0wn on governmental accounts.

    Changing the stupid rules seems to have been beyond Gordon Brown.

  12. Ian Kirkwood says:

    You have my signature. The centuries-long heist on the public purse is not going to hurt any less by ignoring it into the next century. Our public value can only be made safe when we know what it is: Not just our taxes, but also the wealth generated by our tax investments. It is land values that soak up those investments and which we must reclaim. Giving them away as a free privilege to the owners of land was never something we could afford. AGR (Annual Ground Rent) please.

  13. Derek says:

    “Dodgy Dave … appeared to hardly even make a dent on the Scottish elections”
    Perhaps because the majority of the Scottish electorate hate him down to his cotton socks anyway, and the Panama Papers simply provide conformation?

  14. Ian Kirkwood says:

    There is no need for PFI debt to exist. PFI is an extension of the modern IMF economic philosophy that seeks to build economic empires with integral (debt and cheap labour) slavery for the benefit of big business.

    The ‘Washington Consensus’ as promulgated around the world by the IMF advises one thing: Sell all your country’s assets off to the private sector to get money to fund infrastructure etc. How come the countries that reject IMF advice do much better (Hong Kong, Taiwan, Singapore, Botswana etc.)?

    Because they rent out national assets instead and use the rent to fund public services. That rent is from the value of land and natural resources. The biggest resource of all is the public value created by people going about their daily lives. Land rents grow when benefitting sites get improved amenities (like a new Forth crossing) paid for by all of us working together.

    For example, Transport for London commissioned studies (1. Jones Lang LaSalle, 2. Atis Real Weathersall, both available at http://www.tfl.gov.uk) that confirmed its investment in the extension of the Jubilee line resulted in a four-fold return on the £3.5bn outlay. These returns on investment by tax payers are found in the value of all benefiting sites. These billions we awarded free to the owners of the sites for no effort.

    We must learn to collect the value we have just made as a society — AGR (Annual Ground Rent). In so doing, infrastructure becomes self-funding. PFI debt would not exist. See Fred Harrison’s ‘Wheels of Fortune’.

    1. Ian Kirkwood says:

      The additional lesson for us, as discussed above, is to rent out the country’s assets to enterprises; NOT get into the position where enterprises rent them back to us…

    2. Alf Baird says:

      Ian, I assume AGR could be imposed to claw back excessive repayments / ‘value’ from PFI asset owners?

      1. Ian Kirkwood says:

        In Fred Harrison’s ‘The Silver Bullet’ I learned that Botswana got the IMF to appoint a (fantastic and determined, as it turned out) lawyer to renegotiate their badly arranged diamonds deal with De Beers (De Beers break-even date had been as little as 4 months!).

        A new deal was negotiated that split the profits equitably to the benefit of Botswana. That was despite the backtracking IMF appearing, under De Beers pressure, to view their legal appointment as a mistake.

        Yes, lets renegotiate it all.

        1. Ian Kirkwood says:

          Of course all site owners including PFI owners would, under AGR, pay the site value to the state at 5% or so a year. Which might already cover the tax payers’ losses.

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