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P&I Team Briefings Home | Responses | PFI Index | Policy Guide


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.

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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.

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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.

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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.

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£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.

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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.

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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.

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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.

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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?

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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.

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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".

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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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UNISON's campaign against PFI in Scotland is co-ordinated by Scottish Organiser, Dave Watson.

If you have news of PFI developments in your area, Dave would like to hear from you. He is based at
14, West Campbell Street,
Glasgow, G2 6RX.
Tel. 0141 332 0006.
Fax. 0141 331 1203
E-mail d.watson@unison.co.uk