The now notorious North Ayrshire Schools PPP Project was flagged-up last week in the Scottish Parliament as an example of how local authorities are being forced to pay way over the odds for schools built using the Public Private Partnership (PPP) method of funding.
North MSP Kenneth Gibson raised the issue during Question Time,
contrasting the cost of public buildings constructed under PPP (and its
predecessor, the Private Finance Initiative – PFI) with the SNP
Government’s current preferred method of funding, which places a cap on
the profits that can be made by private contractors.
to Mr Gibson’s question, Nicola Sturgeon, the Deputy First Minister and
Cabinet Secretary for Infrastructure, said the SNP Government’s method
“ensures that private sector returns are capped and that there is no
dividend-bearing equity, which avoids the excessive returns and poor
taxpayer value for money that were associated with past Private Finance
In 2006 the then Labour administration of
North Ayrshire Council embarked on a PPP project to build and maintain
four new schools - St Matthew’s Academy in Saltcoats, Stanley Primary in
Ardrossan, Dreghorn’s Greenwood Academy and Arran High School. Despite
the actual value of the four new campuses being just £80m, Labour
councillors committed the taxpayers of North Ayrshire to a 30 year PPP
contract projected to cost around £380m.
Kenneth Gibson told the
Scottish Parliament, “In North Ayrshire, annual PFI payments will
increase from £11.1 million in 2007 to £16.1 million in 2037, meaning
that, ultimately, £400 million will be paid over 30 years for schools
with a capital cost of only £81 million.”
The SNP MSP then asked,
“Does the Cabinet Secretary agree that the profligacy of Labour...means
that local authorities are stuck paying increased charges year-on-year
and that rising payments are limiting North Ayrshire’s ability to invest
in jobs and services?”
Nicola Sturgeon replied, “Yes, I agree.
The fact of the matter is that the PFI approach used in the past has not
delivered best value for the taxpayer.”
The previous Labour
administration of North Ayrshire Council was voted out of office at the
2012 local government elections. However, the contract signed by Labour
councillors in 2006 means the current SNP administration of the Council
has been left to manage the multi-million pound debt stemming from the
Schools PPP Project.