The Scottish Government's ‘non-profit distributing’ model of funding public building projects was a skilful, but largely cosmetic makeover, writes Brian Wilson.
Among the political hypocrisies infesting our little land, few are more brazen than excoriation of “private finance” for delivery of schools, hospitals and other necessities.
The false narrative insists that everything before 2008 was awful, burdening the nation with debt and debris. Along came a flash of Salmondite alchemy, the Scottish Futures Trust (SFT) was born and wicked capitalist motives cast out.
A “non-profit distributing” model was conjured up, suggesting something rather different from reality. Edinburgh’s great financial panjandrum, Sir Angus Grossart, became the cherry on top of the cake.
It was a skilful makeover but largely cosmetic. There has been hardly anything big built in Scotland over the past decade that has not used ‘public-private finance’ as opposed to traditional procurement.
I am prompted to point this out by the circumstances surrounding the Royal Hospital for Sick Children in Edinburgh where public pronouncements seem designed to imply otherwise.
The Health Secretary speaks about NHS Lothian and “the contractor”. But it is more complex than that and given the serious problems with major hospital projects, that becomes a matter which requires both political and legal transparency.
In 2014, a consortium called IHS Lothian was chosen to “design, build, finance, and maintain” the hospital over a 25-year period, the classic ingredients of ‘public-private partnerships’ (PPPs).
Australia’s Macquarie Bank put up the money. Multiplex Europe would build and maintain. A Spanish multinational, Bouygues Energies and Services, is responsible for “hard facilities management” over the next quarter century.
Lifetime costs are estimated at £432 million with NHS Lothian paying “an annual charge to the private sector partner until the end of the contract”. It could not be much clearer.
Since I am not a hypocrite, I criticise none of this so long as there is honesty and everyone understands that most Scottish infrastructure continues to be delivered by PFI/PPP/SFT, call it what you will.
What about SFT? As with much else, we suffer from scrutiny in Scotland having moved in inverse proportion to the number of politicians. So we should be grateful to former civil servants, Jim and Margaret Cuthbert, for ongoing diligence.
Mr Cuthbert wrote recently that the SFT publishes “the wrong sort of information... released late – probably four years after the relevant contract is signed (while) projections themselves are poorly documented and pretty impenetrable”.
Regarding three SFT exemplars, he noted: “There are grounds for concern about the cost of these schemes and potential for excess private profit ... SFT programmes should be getting a degree of monitoring and scrutiny which they are not currently receiving.”
He warns of “hollowing out” of expertise in public sector bodies negotiating these massive contracts while the Scottish Government has no interest in looking “too closely at the detail” while the SFT “is facilitating off-the-book capital expenditure”.
In short: “The Scottish Government has set up success criteria for the SFT which can be fulfilled on the basis of a high-level paper exercise ... which tells us virtually nothing about what is happening to individual schemes on the ground”. Does this sound familiar?
I look back to simpler days. On becoming Scottish Education Minister in 1997, we faced a massive backlog of capital spending on schools. The only way to catch up was through public-private partnerships. It was absolutely the right thing to do.
I quickly approved the first deal for Falkirk to build five new schools – instead of waiting decades in a crumbling queue. Donald Dewar handed over keys at the first completed, Graeme High School, two months before he died. Does anyone in Falkirk regret all that?
Of course, there were mistakes and disasters because each deal was an individual negotiation. However, the overall impact – particularly on schools – has been hugely beneficial in communities throughout Scotland which is why it continues. So spare us the hypocrisy and recognise the reality.
I hope Edinburgh’s hospital problems are sorted and wish the 25-year public-private partnership well. The building’s beating heart will still be the greatest public enterprise of all, our NHS, created 71 years ago this week through the politics of real radicalism.