Highlands & Islands Council is facing an overspend this year of £754,000 because of a higher than anticipated repayment requirement on Public Private Partnership (PPP) funding projects.
PPP and its fellow public sector funding device, Private Finance Initiatives (PFI) – were introduced by the previous Scottish administrations in imitation of a Blairite wheeze down south.
They were short term political expedients for a cash-strapped government intent on keeping traditional voters sweet with continuing public sector developments in touchstone policy areas like education, health and transport.
They were also invariably heavily skewed towards guaranteed serious profit for the participating private investors – at the taxpayers expense. The Skye Bridge scandal, famously revealed and kicked into touch by Robbie the Pict et al, still saw the private company involved walk away with a huge profit margin.
The damage to Highland Council’s current financial sotuation has been uncovered by Highlands MSP, Dave Thompson who rightly, if politically expediently, lambasts the previous Labour / Liberal Democrat administrations which introduced the use of private finance to pay for public spending on projects like schools.
PPP offered a way to get the private sector to fund the initial construction costs, thus moving such costs ‘off balance sheet’.
This device leads to that the public sector (ie the taxpayer) paying considerably more than the initial cost of the project – boosting the profits of private investors with public money
Highland Council’s overspend has occurred because the council budgeted too little for its PPP contract this year. The first bill for the schools arrived in March and, because some of the buildings were completed in 2007-08, it covers more than a year.
The council expects the overspend to be smaller in future, but still to run at £356,000 more than expected. This additional expense will be incurred every year until the PPP contract ends in 2037.
Dave Thompson says: ’The Lib Dems and Labour should be hanging their heads in shame. They have saddled Highland Council with enormous debts thanks to their ridiculous PPP funding – which is simply a get rich quick scheme for private investors. This will lead to even more services being cut by the council’.
I hope and trust that political activists who have forecast the dire fallout from PPP and PFI will resist the temptation of kicking this particular ball and leave the field open for those -there must be some – who at one time thought this a good and prudent means of financing capital projects to defend the process
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