Help Sitemap Home Skip Navigation Contact Us Disability Statement

 
 
Saturday, 22nd November 2008

Premium Article !

Your account has been frozen. For your available options click the below button.

Options

Premium Article !

To read this article in full you must have registered and have a Premium Content Subscription with the The Scotsman site.

Subscribe

Registered Article !

To read this article in full you must be registered with the site.

Sign In
Register

SNP 'scared of challenge' to finance plans



Click on thumbnail to view image
Click on thumbnail to view image
Click on thumbnail to view image
Click on thumbnail to view image
Click on thumbnail to view image

Published Date: 10 September 2008
By David Maddox
Scottish Political Correspondent
THE Scottish Government is "scared" to allow its Scottish Futures Trust to be challenged by other funding methods, it was claimed yesterday.
At a Holyrood hearing, private finance specialist Andrew Gordon, chief executive of the Canmore Partnership, claimed that if SNP ministers were confident in their preferred method for funding major projects they would allow rival bids offering alte
rnative methods.

He added there was no proof that the SNP's plan was any cheaper than traditional private finance initiatives (PFI).

Mr Gordon was one of a group of experts giving evidence to Holyrood's finance committee on the proposals to set up the Scottish Futures Trust (SFT) to direct financing of major projects such as schools, hospitals and the new Forth road bridge.

John Swinney, the finance secretary, is today due announce more details on the trust. However, he has already made it clear that he wants projects to be funded through a not-for-profit distribution (NPD) method.

This is a version of PFI which means that profits are capped at the start. But it removes flexibility from the contract which would allow more money for unforeseen problems or councils to recoup money if less maintenance was required.

After the meeting, Mr Gordon said that Canmore had withdrawn from a major project for NHS Tayside recently because it was not allowed to put a more flexible public-private partnership (PPP) bid forward.

He claimed this was because the government was blocking PPPs.

Mr Gordon said: "I can only think they are scared. If they were confident their method was cheaper, then they would not be worried about alternative methods being proposed. They are putting politics before good finance.

"We just want a chance to put forward our proposals and if the other way is cheaper then so be it."

A source close to Mr Swinney said PPPs were not being blocked but NPDs would "eventually crowd PPPs out of the market".

The committee also heard concerns that the details of the trust are still "too vague" and that projects are being held up while the Scottish Government works out what it wants to do.

Dave Watson, for the union Unison, claimed the SFT would end up being a "self-justifying body" which would work up its own agenda to privatise local government functions.

PROFILE

THE Scottish Futures Trust was originally supposed to be a Scottish Government body which sold bonds in major projects.

However, this initial SNP proposal was deemed to be illegal because the Scottish Government lacks the necessary borrowing powers.

The trust was remodelled as an advisory body which would centralise expertise on projects and financing in Scotland as well as help decide which projects get the go ahead and how they are paid for.







The full article contains 463 words and appears in The Scotsman newspaper.
Page 1 of 1

  • Last Updated: 09 September 2008 10:38 PM
  • Source: The Scotsman
  • Location: Edinburgh
  • Related Topics: Scottish National Party
 
1

walter,

10/09/2008 00:55:55
It does not matter what the government call it the private sector are going to make just as much money either way.

The managing director of Balfour Beatty Capital Ian Rylatt said: "Just because it's called a not-for-profit scheme doesn't mean you can't make money.
Traditional PFI schemes are financed 90 per cent from debt and 10 per cent from equity. Contractors then make a margin on the dividends.
Not-for-profit schemes are financed in the same way but the funding which makes up the majority of the equity carries a much higher margin. This, instead of the dividends, is where the contractor makes its return.
Mr Rylatt said: "We can make just as much money from them and we have no qualms at all about the not-for-profit structure being adopted across more PFI.

Just because it's called a not-for-profit scheme doesn't mean you can't make money.

We can make just as much money from them and we have no qualms at all about the not-for-profit structure being adopted across more PFI.

Kind of says it all really, the SFT with its not-for-profit slogan is just one big lie.
2

a proud doonhamer,

Dumfries 10/09/2008 01:27:16
Mad Maddox ranting again..... no news here.
3

Sierra Foothills Scot,

Diamond Springs 10/09/2008 02:02:57
"SNP 'scared of challenge' to finance plans". Note that the 'scared of challenge' quote comes from a person who has a vested interest in PFI/PPP financing.
4

Auld Twa,

Edinburgh 10/09/2008 07:45:43
"He added there was no proof that the SNP's plan was any cheaper than traditional private finance initiatives (PFI)."
We have been hard pressed to find out the cost of PFI schemes so far, they have been hidden either as commercially sensitive or published like the ERI PFI in such a mass of paper that it will take years to find the true picture.
5

Linda,

Edinburgh 10/09/2008 09:54:33
Solution is independence as Scottish Government cannot borrow money or raise money through bonds.

Why dodn't the critics think out the box for a change?

Lothian Health Board paying £40 million a years over 30 years for PPP/PFI ERI hospital which cost £160 million to build.

Cost to Scottish taxpayers £1.2 billion for a scheme imposed by Westminster.
6

The Federalist (the poster formerly know as NAUON),

10/09/2008 10:17:21
Can anyone explain how the Scottish Futures Trust is FUNDAMENTALLY different from PFI/PPI?

If it looks like a duck, sounds like a duck and smells like a duck - it's a duck.
7

antifa,

10/09/2008 12:07:21
"Can anyone explain how the Scottish Futures Trust is FUNDAMENTALLY different from PFI/PPI?"

Yes. The SFT is an organisation, not a financing mechanism. Thus talk of "replacing" PFI with the SFT is nonsense: you can't replace a financing mechanism with an organisation.

The financing mechanism adopted by the SNP is the NPD which is a very minor variant of the uttlerly discredited PFI. The impact of this is that the 1% of finance that used to come in the form of equity in PFI deals is replaced with subordinated debt (debt from the private investors) under NPD.

Returns on this 1% will now be in the form of returns on interest, rather than dividends. This makes no real difference to the public sector but has the advantage of fooling the press into saying this is now a "not for profit" form of financing.

As the Balfour Beatty quote above recognises, this will not mean less profit for investors: indeed, there could be more profit for the likes of BB if the market contracts due to the perceived riskiness of working with a new model.
8

The Federalist (the poster formerly know as NAUON),

10/09/2008 13:17:19
#8 So you are basically saying that the financing mechanism is virtually the same.
9

Weegiewarbler,

still sailing 10/09/2008 14:09:10
WE just wonder why we can't sign on and comment on many boards here?
Hmmm - too logical perhaps with the comments.
10

Weegiewarbler,

Still Sailing 10/09/2008 14:22:45
#8 Antifa
"Can anyone explain how the Scottish Futures Trust is FUNDAMENTALLY different from PFI/PPI?"

It really isn't at the present time - except one does hope for a bit more accountability and control.

The problem is basic - WESTMINSTER - you see, until independence finally arrives, the Scottish government has NO BORROWING AUTHORITY - so it can't make the significant changes required.

A good example here would be the expendatures for London 2012. Are they really needed - will Englands infrastructure suffer damaging consequences without these sports amenities to allow posturing on the world stage? And yet these are being funded with UK money.

The proposed Forth Road Bridge - Is it really needed (engineering reports say yes) - will Scotlands infrastructure suffer damaging consequences without it.
Probably.
Will this also impact the UK GDP. Probably (assuming continuation of the union).
Yet it is being required to be funded with ONLY Scottish money, which is being reduced.

In simple terms - Your family need to eat - but food prices keep going up - and you need a new car. Not only are we not going to buy you the car, but we're making sure that you can't save your own (Idea behind the SFT) AND make it IMPOSSIBLE (Illegal actually) to borrow the money for the car you need to get your groceries (No public transport BTW).

So - Scotland Innovates - Westminster Frustrates.

Hope this explains the issue, and perhaps why Scots are so very disgruntled at present, most particulary with an intransigent subservient scottish media that appears largely incapable of independent thought.
11

antifa,

10/09/2008 15:51:41
9 - yes, The NPD approach is basically the same as PFI: to reiterate, it only changes the way in which the private sector makes profit on 1% of the capital it commits to the project (i.e. returns on the other 99& are the same as now). The model was introduced by Labour in 2002 and trialled on the Argyll and Bute scheme so it's nothing new. I don't remember the SNP singing its praises back then.

 

Comment on this Story

 

In order to post comments you must Register or Sign In

 
 
RSS Feed of this article's comments
Delivery formats: RSS, Atom, Javascript & Email
 
  

 
 


Sister Newspapers:
Press Complaints Commission

This website and its associated newspaper adheres to the Press Complaints Commission’s Code of Practice. If you have a complaint about editorial content which relates to inaccuracy or intrusion, then contact the Editor by clicking here.

If you remain dissatisfied with the response provided then you can contact the PCC by clicking here.