5 January 2004
PFI firm crises highlight risk and competition failures
A series of high-profile company failures has set alarm bells ringing
in councils and other public services across Scotland according
to public service union UNISON.
In particular the collapse of PFI specialists Ballast plc is leading
to disarray in the Scottish Executive's flagship schools' PFI in
East Lothian, and the collapse at any pretence of competition in
a similar project in Renfrewshire.
"As we can see in East Lothian," said Matt Smith. Scottish Secretary
of UNISON, "the so-called 'risk transfer' that promoters of PFI
proclaim, has been exposed as a myth. Instead of the private firm
carrying the risks of this £45m project, Ballast's parent company
pulled the plug, leaving sub-contractors unpaid, schools unfinished
and the local authority having to pick up the pieces. Let us not
forget that 'risk transfer' is being paid for by the taxpayers,
but now both the construction and the maintenance of these schools
are in jeopardy. In this case also there was plenty of notice -
the parent company Ballast Needham had announced back in March they
were planning to get out of the UK"
Ballast's collapse has also lead to a gaping hole in one of the
two consortia bidding for Renfrewshire's schools - effectively meaning
there is only one bidder for the £160m contract. It has also meant
the halt of a large window replacement scheme in Falkirk schools.
UNISON intends to use this example and similar problems with other
PPP firms such as Amey to relaunch its anti-PPP campaign in Scotland
in the New Year.
Matt Smith says "As more and more horror stories come to light
about private sector failures, the number of firms wanting to bid
for these projects gets smaller and smaller. This means no competition
- like in Renfrewshire or in the £140m contracts for two Ambulatory
Care and Diagnostic units (ACADS) in Glasgow. And the firms that
are around swallow one another up until there are only a handful.
A recent UNISON report on NHS contracts shows that just four big
companies now control over half of all NHS contracts.
"UNISON will be continuing to expose the financial and service
failings of PFI/PPP whilst arguing strongly for increased flexibility
for public authorities to have a real choice in finding money to
invest in services.
Note to Editors: 192 PFI contracts have been signed in the
health sector across the UK worth £3.5bn - 126 in England, 42 in
Scotland, 18 in Wales and 6 in Northern Ireland. Over 51% of these
contacts are handled by the 'big four' firms, ISS, Compass, Sodexho
and Rentokill Initial, all of whom have been actively establishing
themselves as PFI consortiums.
For Further Information Please Contact: Matt Smith (Scottish
Secretary) 07771 548 997(m) Dave Watson (Scottish Organiser - Policy)
07787 558410(m) Chris Bartter (Communications Officer UNISONScotland)
0771 558 3729(m)