SNP call for review of Falkirk PFI contract
Monday, 16 May 2011 15:21
Falkirk Council SNP Group has called on SNP Finance Secretary, John Swinney to review the council’s Private Finance Initiative (PFI) contract with Class 98, the owners of Graeme, Larbert, Bares and Bo’ness High Schools.
The new SNP Government have promised to review PFI contracts approved by previous Labour Administrations which the Nationalists believe are not providing value for money and local SNP leaders believe that the Class 98 contract fits that particular bill.
Class 98 currently own four Falkirk Schools in Scotland’s first PFI contract after Labour’s general election victory in 1997. The capital cost of the contract was £65m but the amount paid back by Falkirk Council is around £370m over the 25 years of Falkirk Council’s lease of the four secondary schools.
However, the SNP are unhappy that at the end of the lease period Falkirk Council will not own any of the buildings with the only concession being that the council has first options on purchasing the schools at a commercial value when the lease comes to an end in approximately twelve years time. Current estimates are that Falkirk Council will have to find around £100m.
SNP Depute Leader and Education spokesperson, Tom Coleman said,
“We are now more than half way through the lease with Class 98 and Falkirk Council will soon have to begin thinking about our options for retaining or replacing these schools.
Given the council only received a 25 year lease of the buildings while granting Class 98 a 99 year lease of the land they are built on it is clear the council have been dealt a particularly poor hand by the then Labour Administration.
PFI in general has been a disaster for the taxpayer and the Falkirk Council contract with Class 98 is the worst example of profligacy with the public purse of any similar sized contract anywhere.
It is bad enough that taxpayers are paying back more than five times the capital cost of the contract but criminal incompetence to sign a contract that leaves ownership of the schools in the hands of a private sector company after paying out £370m.
That is like the building society retaining ownership of your house after you have paid your mortgage and yet this is the deal Labour lumbered the council taxpayers of Falkirk with and is a problem that has to be talked now.
I welcome the SNP Government’s review of PFI contracts and hope that the Finance Secretary can offer some hope to Falkirk Council taxpayers facing the prospect of losing four of our secondary schools in what is a ticking time bomb for our Education Authorities.