Kenny Gibson MSP, Finance Secretary Shona Robison and Conservative MSP Craig Hoy.
By Bill Heaney
Have you ever wondered where councils get all the money they squander on vanity projects such as the council headquarters in Church Street?
In a word, they borrow it just like the people living in large houses and driving sleek cars who are perceived to be “loaded” when all they really are is loaded with is debt.
PFI and PPP Unitary Charges are how it’s done in local government. Councils don’t earn the cash, they borrow it.
And that is why local authorities such as West Dunbartonshire are up to their eyes in debt.
Kenneth Gibson (Cunninghame North) (SNP) lifted the lid on this in the Scottish Parliament last week. It was a political ploy in an attempt to shift the blame from his party, who have been in government at Holyrood for 17 years.
Cllr Gibson asked a placed but pertinent question: “How much [does the Scottish Government] anticipate will be paid in this financial year in private finance initiative and public-private partnership unitary charge payments across the public sector?”
The ever wily Cabinet Secretary for Finance and Local Government, Shona Robison, replied: “The latest published data shows that the estimated total in PFI and PPP unitary charge payments to be paid across the public sector in Scotland in 2024-25 is £1.12 billion.”
Say that again, Shona, with a straight face this time. The Government shells out £1.2 million A YEAR to people it owes money to, speculators and so-called fat cats who are queing up literally for a share of the action, the champagne, cigars, fine dining, playing golf at Cameron House and holidays in the sun. Not to mention the tax free “expenses”.
Some newspapers seldom if ever mention this. Those are the ones whose millionaire owners are keeping silent about the reality of life in a dying world dominated by spin doctors. It’s publish and be damned no more.
We live in a world of ‘don’t bother with that story’, where the company or individual involved has lots of power and spends loadsamoney with us on advertising. One that will pull their business if you go ahead and offend them by publishing something they don’t want to see in print.
It is said disparaginly these days that real newspaper stories are something someone somewhere does not want to see printed, and that all the rest is merely advertising, spin or fake news.
In a typical “it wisnae us” speech, Kenneth Gibson MSP told parliament: “When it was in office at Holyrood, Labour built a debt mountain so vast that, 18 years later, public-private partnership payments are still rising, and they will peak at an eye-watering £1.25 billion next financial year.”
These are the modern day successors of what Cllr Willie Lamont, the Communist firebrand who represented the Renton Ward on the old Dunbarton County Council, called “the Gnomes of Zurich”.
Mr Gibson mentioned that one 21st century council will have to pay more than £16 million next year for four secondary schools that were built nearly two decades ago.
“By the time the contract is paid off, in 2038, it will have paid £440.1 million for schools that were built for £83 million. Owning those schools will cost even more.
“Can the cabinet secretary say what impact Labour’s disastrous PPP obsession continues to have on our public finances?”
Unsurprisingly, Shona Robison went along with Mr Gibson’s line. She said: “Kenny Gibson is quite right to highlight this important issue and its impact on local services. The SNP Government has always made it clear that the PFI approach that Labour used has not delivered best value for the taxpayer.
“We brought it to an end and introduced more affordable schemes in order to reduce the drain on the public purse and to stop the excessive profits. The SNP Government will continue to do that. As Kenny Gibson made clear, we are still paying for the legacy of those mistakes.”
Conservative MSP Craig Hoy (South Scotland) was more forgiving [everyone knows that Tories are seldom economical with the truth] said: “Regardless of the perceived flaws of past PFI models, does the cabinet secretary concede that our constituents are broadly agnostic on how major infrastructure projects are funded and delivered, and that, in short, they just want urgent progress on major projects, including the upgrading of roads …
“Will the minister therefore set aside dogma and fully explore new and alternative models to turbocharge Scotland’s flagging infrastructure procurement programme, including by appraising the infrastructure investment partnership model, as was recently recommended by the Future Governance Forum?”
It was interesting to hear that Shona Robison thinks that “that all our constituents care about value for money and value to the public purse, and I think that all our constituents would be very concerned about the excessive profits made from previous PFI deals that were poorly constructed and not good value to the public purse.
“I find it very strange that the Tories, who often talk about value for money and criticise the spending priorities of the Government, seem so easy with the excessive PFI profits when it suits them— and do not seem to share the concerns—that I think the public share with us.”
There was loud heckling and the Presiding Officer had to tell everyone to calm down before she claimed: “We [the SNP] brought those excessive profits and poor PFI deals to an end, and we introduced more affordable schemes so that we can utilise resources in the best way as we invest in our infrastructure.
“We can do that while also ensuring value to the public purse—which is, it seems, unlike what the Tories want to do.”
As for Labour, they had nothing to say on this subject. A special adviser must have told them [wisely] :”What ever you say about this, say nothing.”
PFI was one of the biggest pillages ever on the public purse.
Few folks know about or understand the concept of what PFI is. They do not understand that it is he concept of owning nothing in favour of renting everything. on a hire purchase arrangement.
Anyone with a modicum of sense understands that buying something on the store card, or the old Provident cheque was a very expensive way to buy anything. And so it is with PFI. Borrowing from the private sector to fund a school, a hospital, a road, a prison, a sewage works, street lights, a fire station, a fleet of ambulances, even nuclear submarines is a very expensive way to go.
And so it is with PFI. A good mind picture would be a super tanker. At the stern the accommodation section of the ship towering sticking out above the ship That represents the capital cost of PFI. And then the huge long front of the ship much of it hidden below the water line. That represents the finance charges for the cost With the finance cost four, maybe five maybe six times the capital cost it is not difficult to see how the finance corporates are happy to lend governments huge amounts of tick and as I say there ain’t nothing you can’t PFI.
And when you are up to your neck in hock where does Muggins Joe Public think the money to pay for the expensive finance come from. The taxpayer – no never, away with you, who cares.
Indeed, turning to our own local little barrel of unsustainable do dah , a little bird suggests that the local authority some years back sold off the future rent income from its major shopping centre for a lump sum and debt for the foreseeable future. That they call securitization. But what happens when the shops units close and the rents. But look at our councils books. Look at the trading that it does in debt instruments. It’s like a mini City of London trading in debt instruments – and you can hazard a guess that the council doesn’t truly know the depth of its indebtedness. It only when the biscuit tin runs empty to pay for things that the true problem begins to emerge – and that is why cities in America like Detroit went bust. A salutary lesson to all the Council Employees who lost their comfortable pensions, and a city who had to sell of assets extending even to museum pieces.
Could the council employees here lose their pensions. Well look at the Carillion bankruptcy only a few years ago where tens of thousands of pensioners lost big chunks of their pensions. Aw shucks, who would have thunk the gravy train could end. But its all got to be paid for, and the proverbial does happen.
And then there is the impact of PFI. Building tomorrows slums today was a tag line from some years ago. But when it comes to PFI this could be a reality. Schools with walls falling down, new colleges with walls and windows falling off, a hospital with Gerry Built facilities – or even a Grenfell type disaster in the wings. PFI ushered in the process of design and construct and self certification as to quality and safety. He who pays the piper, or is it what the eye doesn’t see, or is it there is always a man who can build it that little bit cheaper and for less. Yes self certification pushes the design envelope to its lowest limits.
But just look local at the new Balloch school only a few years old with its broken and patched over external walls. Design and construct, self certification, tomorrows slum today in the making. The country is full of it, not just our local home patch.
Started by Thatcher, picked up by Blair and Brown and then the only show in town for the hapless Scottish Parliament of all shades, I wonder if the people really care. I don’t know if they do – but one thing for sure its all got to be paid for and things do seem to be getting poorer and poorer in terms of the affordability of health care, social services, benefits, pensions whilst the oligarchs get richer and richer. Or is it only Russia that has oligarchs.
Anyway, good piece on PFI. People obviously love paying big bucks, top dollar for everything or else we wouldn’t be doing it.