PFI works may cost £2bn more than with public cash

Published on Tuesday 2 October 2007 00:48

THE use of private firms to build projects like schools and hospitals could be costing £2 billion more than it would in the public sector, a union claimed yesterday.

Unison also says that a 3.5 billion "insurance" policy has been effectively paid to contractors across more than 100 public private partnership (PPP) and private finance initiative (PFI) projects in Scotland.

A report entitled At What Cost? says no new PPP contracts should be approved and calls for all existing contracts to be reviewed.

Dave Watson, Scottish organiser with Unison, said: "We totally dispute the rigged calculations used to justify PFI and PPP schemes. All the figures should be provided for public scrutiny."

The schemes cover a range of capital projects including schools and hospitals.

They were used extensively under the last Labour-Liberal Democrat Executive, but the new SNP administration is opposed to them.

Unison looked at 35 schemes for which it had acquired figures. These indicate that about 550 million more was spent on PPP schemes than would have been the case with conventional funding over the length of the contracts.

If this were extrapolated over the 129 PFI signed and potential schemes in Scotland, this could be almost 2.1 billion.

The report says it is "notoriously difficult" to get detailed financial figures for many PFI/PPP schemes in Scotland due to claims of commercial confidentiality.

The new SNP Government wants to squeeze out PPP/PFI schemes with the introduction of its Scottish futures trust as a more attractive way to fund projects. A Scottish Government spokesman said: "Ministers welcome this research on the failings of PPP/PFI, and will wish to study the report in detail."