scottishleftreview Issue 2 December 2000 THE 30 YEAR STITCH-UP PFI and the new Scotland Tom Nairn on Constituting Scotland Andrew Noble on Nick Davies' The School Report £1.50 £1.00 Claimants Editorial scottishleftreview: Issue 2 December 2000 A journal of the left in Scotland brought about since the formation of the Scottish Parliament in July 1999 Isobel Lindsay Contents ucrative Contracts for Businessmen” was the “Lheadline in Scottish Business A.M. (20/09/00) in Editorial .................................................................. 2 response to the announcement that the Scottish Executive Isobel Lindsay is a lecturer in the Department of Government AT was to launch a substantial increase in the use of Public Strathclyde University. She is an Office Bearer in a wide range of civic Private Partnerships (PPPs). This gung-ho mortgaging organisations in Scotland. of Scotland’s future public finances must be challenged. How to make a healthy profit.................................. 4 This edition of SLR illustrates the extent to which these schemes are riddled with problems and shrouded in Mathew G. Dunnigan is a retired consultant physician. He is a leading secrecy. The relative quantity of PPPs in Scotland puts figure in the National Health Service Consultants' Association. us very much in the front-line. Obfuscation, obfuscation, obfuscation ................... 6 The problems are not just around excessive long-term Henry McCubbin worked for BBC and Grampian television before costs to the public. They are also quite contrary to all becoming Labour MEP for North East Scotland and whip for the the sloganising around the ‘knowledge economy’ and Socialist Group in the European Parliament. He has recently been ‘new thinking’ since we are being tied into a static future providing economic advice to the Greater Manchester Authorities. with very long-term management and rental contracts Brickbats and slated............................................... 8 for public service provision. Transparency and open Writing in a personal capacity, Craig Binns works in the Housing government are also off the agenda with these deals Department of Glasgow City Council. He is a senior lay officer with since so much is hidden under the excuse of commercial Unison. confidentiality as Henry McCubbin illustrates. Constituting Scotland ........................................... 10 The first example we had in Scotland was initiated by Tom Nairn is one of Scotland's leading writers and political theorists. Michael Forsyth. The Skye Bridge is now universally His seminal work, The Break-Up of Britain, has been followed by a regarded as a financial disaster for everyone except the wide range of controversial and internationally renowned books. banks. A leaked report (Scotland On Sunday 19/11/00) on one of the most recent projects, the Kilmarnock Prison, Book Review: Drowning in disorder ..................... 13 suggests that it will cost up to £160m more than claimed - Dr Andrew Noble is a Senior Lecturer in the Department of English £290m over 25 years rather than £130m – and that it costs Studies, University of Strathclyde where he specialises in American, the community £26,000 per year to keep a prisoner there, Scottish and Irish Literature. Early next year his and Patrick Scott not the £11,000 stated by the Scottish Prison Service. The Hogg's complete re-edition of Robert Burns's poetry will be published fact that there can be such different interpretations is, of in an 1100 page edition as The Cannongate Burns course, a product of the secrecy around these deals. Web Review........................................................... 15 Also affecting Scotland we have the proposed PPP for the National Air Traffic Service, placing its management Front Page Cartoon: Jim Blair in private hands. As part of its preparations for this, the Government asked the Civil Aviation Authority to come Editorial Committee up with proposals for savings on NATS as a ‘sweetener’ Aamer Anwar Henry McCubbin for the PPP. They did this in an unpublished briefing document in October which suggested cuts of £165 Bill Bonnar Liam McIlvanney million from the NATS budget over the next five years. Moira Craig Tom Nairn (The Observer 26/11/00) We can also on this issue Roseanna Cunningham Andrew Noble have some sympathy for Londoners who are faced with Cathie Jamieson Jimmy Reid (editor) the privatisation and fragmentation of their underground John Kay Alex Smith despite the overwhelming unpopularity and the option Isobel Lindsay Bob Thomson of alternative funding schemes which would keep the John McAllion service in public control. Subscriptions, submissions and queries to: These PPPs raise major issues of democratic Scottish Left Review, 741 Sheilds Road, Pollokshields, Glasgow G41 4PL. accountability as well as the efficient use of public Tel/Fax 0141 424 0042. Email [email protected]. Website www.scottishleftreview.com resources. Of course, borrowing money in any system 2 always ties us into future commitments but the ties service the buildings. It is then not such a big step to involved with PPPs are far more restrictive and far- argue that they should also manage the teachers or the reaching. Public authorities are legally bound to hand nurses or the clerical workers so that there could be over the construction and operational control of hospitals, better integration of the work teams. schools, etc. and to pay rental for these services for 25-30 years. The social and population changes which we have Why is this happening? It is a strategy imposed from seen over the past 30 years have been substantial. Given above. Local councillors and officials have been highly the rate of technological change, they are likely to be even critical “off the record” but they have been presented with greater over the next 30 years. Anyone who claims to little choice. The alternative to the Treasury’s insistence make more than an informed guess as to what our needs on PPPs is a drastic restriction in the capital programmes for services and buildings will be in that time-scale is of public authorities. One does not have to be paranoid lying. We might find with new information technology to note that in the present round of GATS (General that we want to organise education in quite different ways Agreement on Trade in Services) negotiations, influential and to make radical changes in our use of buildings or lobby groups have been working behind the scenes to land. But we will still be tied into paying large amounts persuade the US and the EU to allow service-based of rental not just for the original building construction but multi-nationals greater rights to enter the markets of for management fees for the servicing of these buildings other countries. For example the Coalition of Service that may have seemed appropriate in 1999 but may be Industries is a US-based group who want to be able to totally inappropriate in 2015. It is not just the nature of target European health and education provision. There is service delivery which may change. The distribution of little doubt that this is on someone’s agenda. population in Scotland is changing and may continue to The excuse that this is just about getting access to scarce do so at a faster rate. We simply do not know what will capital does not stand up against the well-known financial happen. Yet we are being tied into a static future in terms arguments against PFI. Maurice Fitzpatrick, head of of the financial implications of these schemes at the very economics at the city accountants Chantrey Vellacott time when there is so much fluidity in our thinking about DFK argues that “for every net £1bn of PFI contracts what that future will be. This is truly borrowing from our outstanding this is an extra cost to the public sector of children. £50m per annum.” Bonds are another option used widely This form of funding also undermines democracy and open in the U.S. but despite all these options we are being government, both values that the Scottish Parliament pushed down the route of the least favourable to the long- was supposed to promote. They are shrouded in secrecy term public interest. in the guise of commercial confidentiality. In virtually If we were being charitable, we might account for all of these projects not just the public but also many this policy as a short-sighted attempt to get current elected representatives are denied full access to all the investment while leaving the next generation to pick up facts and figures. Surely one of the principles we were the bills. There is also the old excuse about keeping the all supposed to sign up to was that you could not have Public Sector Borrowing Requirement low in preparation effective and accountable public decision-making without for entry into the Euro. But public sector accounting transparency? practices are set to change to a system of ‘resource If we were talking about a few PPP projects throughout accounting’ where assets, liabilities and depreciation are Scotland, this would be bad enough. But what is alarming all declared. This is long overgue and brings us into line is that the signs coming from this Government, both with most other European countries. The outcome of this at Westminster and Edinburgh, is that this is to be the will remove some of the specious arguments that have preferred method of financing public capital programmes. been used up until now to justify the PPPs: Just think ahead to a situation when a large proportion "this innovation cuts the ground from under the PFI. of our schools, hospitals, prisons, transport facilities, Once public investment is fully costed and justified, what administrative offices, recreation facilities – are all tied need is there for the sleight of hand of the PFI - for into expensive long-term management contracts which which revenue payments are going to have to be made for we cannot change or could only do so with substantial decads to come?" (The Guardian 20/11/00) penalties.