A briefing on the Private
Finance Initiative
November 2002, issued by UNISONScotland for branches
Two-tier workforce on way out?
UNISONScotland has welcomed the STUC/Scottish
Executive protocol designed to end the two-tier workforce
in future PPP schemes. However Matt Smith says the the campaign
against PFI goes on.
"This protocol is a major step forward in preventing
future two-tier workforces in PFI and PPP schemes.” He said.
"It applies across the public sector and it applies
to new workers being employed under these contracts."
This does not mean that unions will stop campaigning
against PFI/PPP. Matt Smith said; "UNISON is campaigning for proper
reform of public services. Quality services are what people want,
accountable, flexible, planned and delivered by a professional
staff. This is next to impossible under PFI. It is still poor
value for money, breaks up the public service team and leads to
poorer services for the people of Scotland, so UNISON will still
be opposing it."
Two-tier campaign continues
The unions will also continue to campaign against
the two-tier workforces that currently exist and argue for privatised
workers to be brought back in -house like many of the contract
workers in Glasgow's NHS Trusts. We will also be closely monitoring
progress.
Usage problems for Glasgow's schools
More problems for the flagship Glasgow Schools PFI
schemes just after the Prime Minister praised them at the Labour
Party conference. It has emerged that the council will have to
renegotiate extra community provision – of course at a cost.
This highlights UNISON's concerns over the lack
of flexibility in PFI schemes. No one can accurately anticipate
demand over a typical 25 year PFI contract. So the company has
the council over a barrel. In this case it is a surprise that
this problem has come to light before the scheme is even a year
old!
…and in West Lothian
More schools problems with the West Lothian PFI
scheme suffering significant delays, extending the summer holidays
for many pupils.
Public Backs Review
The success of UNISON Labour Link in winning overwhelming
support for a review of PFI at the recent Labour Party conference
has been backed by the public. In an ICM poll 63% of voters supported
a moratorium on PFI while an independent review takes place.
Dave Prentis successfully argued for a moratorium
and a review of PFI at the Labour Party Conference.
Trusts - merely window-dressing?
There is growing interest in Not for Profit or more
accurately Non Profit Distributing Trusts (NPDT) as conventional
PFI models are discredited by just about every independent study.
However, it is not always clear that the NPDTs proposed
by several local authorities in Scotland are not an alternative
to PFI. They are simply a different structure for delivering it.
They have the advantage of clawing back profits,
particularly from refinancing, but many other PFI weaknesses remain.
There is little evidence that they will be able
to borrow as cheaply as a local authority and lending conditions
may impact on the ability of trusts to employ staff (see
P&I Briefing 36 Public Interest Companies).
Our concern is that NPDTs are simply window-dressing.
The SNP are again talking about not-for-profit trusts, although
it is unclear if this is a new proposal or a rehash of their previous
two trust proposals.
Clarity and detail would help their claim's credibility.
£1bn of investment = £5bn of your money
That is the crazy economics of privately-financed
public services.
Recent Labour party claims for public sector investment
have been inflated by including the costs of depreciation and
sale of assets according to a new paper from Professor Allyson
Pollock.
Treasury figures show that net capital investment
for 2003/4 will be £19.7bn compared with the Labour Party claim
of £41.8bn.
The Treasury still does not provide a breakdown
of unitary charge payments or data on PFI subsidies (what have
they got to hide?).
However, Professor Pollock has been able to calculate
that the government is now committed to debt payments totalling
£106bn by 2027 for contracts worth only £22bn of new investment.
This shows that each £1bn of new PFI investment
will generate £5bn of public expenditure commitments over the
life of the contract.
PFI? - no thanks
A survey of public sector finance directors has
yet again exposed the myth of PFI value for money claims. 57%
did not believe PFI was value for money and only 6% of those with
actual experience of PFI projects would strongly advise other
organisations to use PFI.
Financial Loyalty
The Scottish Parliament's Finance Committee produced
a predictably loyal majority report after its investigation into
PFI. However there were a number of useful recommendations, including
proposals to end the two-tier workforce.
Fire in the Highlands
Even emergency services are not exempt from PFI.
In an analysis for the Sunday Herald, of a proposal to effectively
privatise the Highland Fire Brigade.
Dave Watson showed that the PFI proposal would
cost £80m more over the period of the contract.
Squeezing the public purse
A number of PFI companies (including Amey - did
we say 'Watch this space' in our last?) are reporting financial
difficulties and are attempting to persuade the government to
make life even easier for them by reducing bid costs (see Treasury
story - below).
However, Scottish banks continue to rake in the
profits from PFI. No doubt they all, like the Bank of Scotland,
"want to be part of the process of improving public infrastructure
in the UK". Oh really! Nothing to do with the fact that, unlike
normal commercial joint ventures, public authorities have to reimburse
the banks if the venture goes bust, then?
Treasury swallows private sector line
With the manipulation of Public Sector Comparators
(PSC) having been exposed by UNISON, the Treasury is now promoting
new ways to support dubious value for money claims.
In the draft "Green Book" they are proposing new
methods of increasing the PSC based on advice from companies who
have large vested interests in PFI.
Not only are they expensive
A government report has admitted that the design
of public buildings built under PFI "must improve". Amongst other
recommendations the report states that many projects are built
too quickly, thus overlooking design.
Worst designs
Kelvin Campbell from Urban Initiatives said " The
civic tradition used to mean that public buildings were some of
the best designed – now they are amongst the worst".
And finally…
The first act at a new Edinburgh PFI school was
to bulldoze 500 trees and shrubs planted as a millennium forest
by local youngsters. However, one tree survived.
That planted by a certain ex Scottish secretary,
Michael Forsyth. PFI contractors certainly know who their friends
are!
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