MACDONALD SLAMS FALKIRK COUNCIL OVER “POSSIBLY THE WORST PFI CONTRACT IN HISTORY”
Wednesday, 03 February 2016 12:02
EDUCATION MINISTER CALLS PFI DEAL “BIG MISTAKE”
Falkirk East MSP Angus MacDonald has raised the issue of Falkirk Council’s 1998 PFI schools contract in the Scottish Parliament chamber calling it “possibly the worst PFI contract in history”.
Speaking at Education Portfolio Questions last Wednesday (27/01/16), Angus MacDonald asked Education Minister Dr Alasdair Allan:
“The minister may be aware of new figures that have been released showing that Falkirk Council’s four private finance initiative schools, which were constructed for £63 million under a previous Labour Administration in 1998, will have cost around £420 million by the end of the contract period in 2025 and Falkirk Council will still not own them, making it possibly the worst PFI contract in history.
“Does the minister share my serious concerns that Labour’s implementation of Tory policies has resulted in the Labour-Tory coalition in Falkirk having a financial black hole in its budget that is disproportionately higher than the vast majority of Scottish local authorities, with the resulting impact that that will have on education services?”
Education Minister, Dr Alasdair Allan responded:
“The Scottish Government has made clear that the PFI approach that was used in the past has not delivered best value for the taxpayer in Scotland. Certainly the project in Falkirk that was mentioned by the member raises some big questions of that kind.
“Alongside the Scottish Futures Trust, we have been encouraging procuring authorities to look at how they can better manage contracts to ensure that they deliver better value for money in the future and to identify areas for potential savings, such as through benchmarking, rescoping services and sharing insurance costs. We will continue to support and work with authorities to identify where those savings can be made, but the member makes the important point that we have to learn from some very big mistakes indeed that have been made in the past.”
Speaking after his question was taken in the Chamber, Angus MacDonald MSP said:
“It is important to note that many of the Labour Councillors who were members of the Administration in the 90’s still serve on the Council to this day, and they must be held accountable for the decisions they took in the past.
“In 1998 when this PFI project was approved by Falkirk Council it was done on the basis that the lifetime cost of the project would be £214 million, with the build cost being around £63 million.
“The most recent projected lifetime cost from Falkirk Council is £420 million by the end of the contract period in 2025.
“As ownership of the schools does not revert to the Council in 2025, Falkirk Council appears to have to make an additional payment of £5 million to ensure ownership or enter a new contract with the owners. Ownership of the contracts can be highly lucrative as they are traded, with the Falkirk PFI contract being sold on twice to date, the current owner being Semperian, an investment organisation specialising in ownership of PFI contracts.
“With such spectacular financial mismanagement by previous and current Labour administrations in Falkirk it is no wonder the local authority faces a financial black hole disproportionately higher than the vast majority of Scottish local authorities.”