Outcry as PFI repayments hit a record £1bn
THE cost of Labour’s disastrous PFI schemes has soared beyond £1billion a year for the first time.
The ‘toxic legacy’ of the ‘build now, pay later’ approach has left taxpayers with huge interest fees.
The annual cost of the ‘private finance initiative’ (PFI) topped £1billion for the first time after repayments rose by 9.2 per cent in the past five years.
The PFI scheme was run by Labour when it led the Scottish Executive in the early years of devolution.
It allowed it to build schools, hospitals and other public buildings.
The scheme sees companies receive an annual fee, usually over a 30-year term, to construct and maintain public buildings.
Nationalist MSP Ash Denham, who sits on the Scottish parliament’s finance committee, said: ‘The scale of PFI repayments are staggering, showing the incompetence and damaging legacy of the previous Labour and the Lib Dem executive.
‘Deals like the PFI contracts for schools across Scotland, recently revealed as costing the public purse £426million this year alone, will leave taxpayers paying way over the odds for years to come.
‘Labour and Lib Dem enthusiasm for ruinously expensive PFI deals is still costing the public purse eye-watering sums of money. Money that could have been spent on improving important public services is instead being diverted to pay off their enormous debts.
‘Rather than indulging in overinvolved the-top rhetoric on Scotland’s public finances, Kezia Dugdale and Willie Rennie would do well to reflect on how their own party’s failures are still costing Scottish taxpayers a fortune.’
Scottish Government figures show PFI payments in 2016-17 cost £1.009billion, 1.4 per cent higher than £995million a year earlier and 9.2 per cent higher than £924million in 2012-13.
Around 150 new schools and healthcare facilities were delivered in a decade as a result.
However, the repayments in PFI have far exceeded the original cost. In 2013, a study of 27 capital projects across Scotland’s NHS estate, valued at £1.28billion, found that lifetime payments will reach £6.7billion over the next 30 years.
The most expensive projects have included Edinburgh Royal Infirmary and Wishaw General and Hairmyres hospitals, both in Lanarkshire.
The costs include construction, maintenance and facilities management and are paid by public sector authorities and the Government.
When it came to power in 2007, the SNP opposed PFI, which initially caused a slump in the number of building projects.
It adopted a Non-Profit Distribution’ (NPD) funding model, whereby contractors invest solely in the debt of a project and do not put in any equity or receive any returns on their capital investment. But critics say it is broadly similar to PFI.
Scottish Labour finance spokesman Jackie Baillie said: ‘Despite campaigning for years to abolish PFI, the SNP has carried this on under a different name and has made a mess of it. In fact, there is now more involvement from the private sector than ever before.’
‘Ruinously expensive’