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Mon 22 August 2011

UNISON: FOI reveals Scottish Water has no business cases for PFI deals - and Parliament was misled

No business cases can be traced for multi-million pound PFI wastewater contracts – and a Scottish Parliament committee appears to have been misled – according to a decision by the Scottish Information Commissioner over Scottish Water.

UNISON Scotland has welcomed the groundbreaking Freedom of Information (FOI) decision by Scottish Information Commissioner Kevin Dunion, but said it was “scandalous” that it showed Scottish Water has no business cases for nine PFI contracts.

The decision also reveals that Scottish Water conceded it may have misled a Scottish Parliament Committee over the documents.

The Commissioner Kevin Dunion has ordered Scottish Water to provide UNISON with full financial information on its PFI wastewater contracts, over-ruling their objections that this would substantially prejudice the confidentiality of commercial or industrial information.

Following a lengthy investigation, he found that, incredibly, Scottish Water does not hold any Full Business Cases (FBCs) for the multi-million pound water and sewerage PFI contracts, therefore does not have to release them to UNISON.

FBCs are supposed to provide the case for proceeding with a PFI contract although critics, including UNISON, argue the figures are often ‘massaged’ to support PFI over conventional financing.

The Commissioner’s Decision Notice shows that Scottish Water admitted, in effect, to misleading the Scottish Parliament’s Transport & Environment Committee in 2001, informing him that “it was possible a document had been liberally referred to as an FBC when it was not actually an FBC.”

UNISON’s Scottish Organiser Dave Watson said it was “scandalous” that either the projects had been approved without any FBCs that could be scrutinised to examine claimed value for money issues, or that these key documents had been lost.

He added: “Scottish Water says that FBCs were not required to be carried out for these early PFI projects, but the Scottish Government’s own website still to this day says that FBCs were published for two of the nine contracts and Scottish Water told MSPs that at least three existed, yet it has not been able to trace them.

“We also asked the then Scottish Executive for these documents and they too said they were not held, but at that time we assumed at least that Scottish Water would have them. We will be pursuing the mystery of the missing or non-existent FBCs with the Scottish Government again.

“We expect MSPs will also be concerned to learn that they were led to believe in 2001 that FBCs were carried out when it seems highly likely that these contracts were approved on the basis of minimal ‘back of an envelope’ calculations, which is a disgrace.”

The nine contracts, most of which run for 30 years, cost nearly £600 million in capital costs and around £130 million annually.

Following UNISON’s initial Freedom of Information request to Scottish Water in 2006, some information from seven contracts was provided at different stages, with all of the information from three being released - Moray, Tay and Daldowie. (The Scottish Executive had separately provided some information on two other water PFI contracts.)

Mr Dunion said: “Scottish Water did not provide any reasoning as to why the disclosure of particular information in certain contracts appears not to have damaged Scottish Water’s interests while the disclosure of similar information in other contracts would, or would be likely to, prejudice those interests substantially.”

Dave Watson added: “For too long commercial confidentiality has been used to keep the true costs of PFI from the public. This decision shows how important it is for Freedom of Information legislation to be extended to cover private companies providing public services as so many are not covered, including the privatised English water companies.

“In this case, the Scottish Information Commissioner concluded that the information withheld was subject to the Environmental Information (Scotland) Regulations 2004. The EIRs can cover the contractors whereas FOI legislation doesn’t. The Scottish Government last year dropped their limited plans to extend the legislation but should reconsider this urgently.”


Notes to editors

1. The full Decision Notice ‘Decision 166/2011 Unison and Scottish Water PFI/PPP Wastewater contracts Reference No 200701447’ is available from Monday 22 August on the Scottish Information Commissioner’s website atwww.itspublicknowledge.info/ApplicationsandDecisions/Decisions/Decisions.php

2. The  Scottish  Parliament’s Transport & Environment Committee 2001 Report on Inquiry into Water and the Water Industry is atwww.scottish.parliament.uk/business/committees/historic/x-transport/reports-01/trr01-09-vol01-01.htm. The reference to a document referred to as an FBC when it was not is at paragraph 57.

3. The Scottish Government information on PFI/PPP contracts ‘Done Deals’ is atwww.scotland.gov.uk/Topics/Government/Finance/18232/donedeals

4. UNISON Scotland’s Report ‘At What Cost’ is at www.unison-scotland.org.uk/comms/atwhatcostoct07.pdf

5. For further comment please contact Dave Watson, Scottish Organiser, 07958 122409 or Stephen Low, Policy Officer, 07956 852822.