PFI schools bill to reach £434m - nearly 10% of schools budget

Written by Tom Freeman on 4 July 2018 in News

Rising costs of legacy PFI contracts to councils highlighted by SPICE figures

Edinburgh PPP schools closure - Kay Williams

The amount councils pay private finance consortia for use of school buildings built under historic PFI schemes will climb to £434m in the new academic year, figures from the Scottish Parliament’s Information Centre (SPICE) have shown.

The figure amounts to nearly ten per cent of the overall schools resource budget.

The SNP have highlighted the figures as evidence of the “toxic legacy” of PFI contracts pursued by Labour.

Several hundred new schools were built using PFI schemes in the first years of the Scottish Parliament, including 17 schools in Edinburgh closed in 2016 after structural flaws were found.

The scheme kept public borrowing off the balance sheet but led to much higher costs in ‘unitary payments’ for councils over the length of each contract.

But the SPICE figures do not estimate the cost of the ‘non-profit distributing’ model (NPD) introduced by the SNP to replace PFI, which has still used private finance to fund school estate since 2007.

SNP MSP Gordon MacDonald said: “Labour’s toxic PFI legacy means the public purse is still paying heavily over the odds servicing their decade-old debts.

“They ought to apologise for their mistakes – which will cost our schools £434.3 million this year alone, nearly ten percent of the entire schools budget.

“Money that councils could use to pay for teachers, books and facilities is being used by councils forced to pay for Labour’s mistakes.”

But Scottish Labour’s Jackie Baillie accused the SNP of “breath-taking hypocrisy” over the omission of NPD.

“Despite campaigning for years to abolish PFI, the SNP simply renamed it,” she told the Herald.

“In fact, under the SNP there is now more involvement from the private sector than ever before and the cap on their profits has been removed.”

Following the closure of the Edinburgh schools, the Royal Incorporation of Architects in Scotland (RIAS) warned all public bodies to urgently review the quality of all buildings constructed under private finance over the last 20 years.

Earlier this year the National Audit Office revealed PFI payments will cost Britain almost £200bn in unitary payments over the next 30 years.

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