PPPs – a Perpetual Public Problem – Katelynne Kirk
Public infrastructure spending is a complicated issue, there is no doubt about that. There will always be competing priorities – should more funds go towards the NHS or education, care or energy – let alone which communities are most in need?
But before getting into the details of which projects to fund, there is the question of how we fund our infrastructure. Since the 1990s Public Private Partnerships have been used in Scotland but you would be forgiven for thinking that PPPs were a thing of the past since the SNP government proposed to stop using the expensive and wasteful PFI model after coming into power. However, while alternatives with variations were implemented – NPDs and Hubs – they are all PPPs.
The confusing acronyms are irrelevant, each of these initiatives are Public Private Partnerships and each perpetuate serious issues for our public sector. Through PPPs we invite private companies to build and manage our infrastructure projects, like schools and hospitals. Initially this sounds great – because of the perceived short-term gain – but so does a payday loan. We may gain the new school we need with less of the upfront costs but this comes at an exorbitant cost resulting in taxpayers contributing to huge private profits and diverting public money away from vital infrastructure and services.
In all their forms, PPPs saddle the Scottish public sector with high levels of debt, poor service provision, lack of accountability, and unsafe buildings.
Jubilee Scotland is calling on the Scottish Government to abolish the use of PPPs and commit to a model which has safety, quality, value for money, wellbeing and accountability to the taxpayer at its heart.
With the introduction of private finance in a public project there is the inevitable introduction of a new priority – ensuring private profits. This means, what should be our real priorities – quality, safety, wellbeing, sustainability, value for money and accountability to the taxpayer – become squeezed, along with our limited public purse. Unfortunately PPPs are an exercise in short-term thinking asking the taxpayer to foot an enormous bill down the line.
When we see the strikes by public sector workers being opposed by a narrative that there just isn’t the money to pay higher wages, we must reconcile ourselves to the fact that they, along with those struggling with poor service provision, are paying the price for a lack of foresight, due diligence and joined-up thinking about public spending.
This was recognised by Allyson Pollock years ago as she suggested that the cost of PFI schemes had created an affordability gap in the NHS which among other things has resulted in “30% cuts in bed capacity and 20% reductions in staff in hospitals financed through PFI.”
As well as being poor value for money, PPP contracts do not reflect the realities of fluctuating economic conditions and, as shown in the hospital parking scandal during the covid crisis in Scotland, they do not allow the flexibility to adapt to other unforeseen social crises. When many in the Scottish parliament and civil society are seeking to place wellbeing and sustainability at the heart of policy, it is clear to Jubilee Scotland that the use of PPPs must be abolished in order to achieve these aims.
As we watch our Net Zero targets come and go we also have to face the fact that supposed short term solutions like PPPs are hindering our ambitions to face our environmental responsibilities. By designing and constructing buildings with an expected life span of around thirty years we are neglecting our duty to reduce our carbon emissions. We are accepting that we may need to rebuild in around thirty years, meaning we will create yet more carbon emissions with every unnecessary construction project.
“.. we have been demolishing and landfilling, or selling-on, old, well-located schools and other public buildings, with big windows and hundreds of years left in their sturdy structures, because “it will take thousands to repair the roof”, then spending tens of millions on shoddy, short-term replacements. We need to pivot towards practices that prioritise repair and renewal before demolition and replacement.”
Malcolm Fraser (Fraser/Livingstone Architects)
So, what is the alternative to PPPs? The alternative to Public Private Partnerships are Public Public Partnerships. The Scottish Government is already using such a model for the new Learning Estate Investment Programme (LEIP), which brings together the Scottish Government and Local Authorities in a partnership. Local authorities will be fully responsible for the costs of constructing new schools, which they can pay for through capital budgets, or by borrowing the money through the Public Works Loan Board. The Scottish Government will cover the ‘lifecycle and maintenance’ costs of these new schools, including day-to-day running costs of the buildings and the ongoing maintenance costs. The LEIP model attempts to move away from the use of private finance, and is also an example of the progress we can see when the Government collaborates closely with Councils to find new solutions. LEIP is a step in the right direction. It would therefore be relevant that the Scottish Government explored options to expand the best parts of LEIP beyond the education sector. It is also important to explore how the planned National Infrastructure Company could support such Public Public Partnerships and what role the Scottish National Investment Bank could play if given the correct dispensations.
PPPs are not simply a domestic issue for Scotland, Jubilee Scotland is part of a global network of organisations (Our Future Is Public) working to end the use of PPPs across the world. While we have been aware of the issues with PPPs for decades, we continue to use them in Scotland, setting a damaging example for global south countries.
“In the seven case studies in this report, we find that PPPs have failed on many different levels, with serious negative impacts on the citizens of countries from Spain to Nepal. These impacts have risked compromising the fulfilment of fundamental rights, and undermining the fight against inequalities and climate change.”
It is imperative that we find an alternative that protects public finances, not just in Scotland but in countries that cannot afford to become trapped in greater debt and potential human rights crises at the expense of private profits.
Katelynne Kirk is the Campaign, Communications & Administrative Assistant at Jubilee Scotland