The politics of finance

3rd August 2001 at 01:00
THE story of Balfron High (page four) is the usual one of mixed blessings. The new building, funded by the controversial but complex public private partnership arrangements, is the outcome of a costly, legalistic and bureaucratic process. A pound;15 million school costing pound;50 million over the 25 years of the contract does not, on the face of it, suggest a brilliant bargain for anyone other than shareholders. On the other hand, if this is the only way an excellent school can be housed in an excellent building, with the private companies picking up the tab for repairs and maintenance, who other than the most unreconstructed ideologue is going to quibble?

The trouble is that the PPP principle has been too much troubled by ideology. Apart from the political spats that have dogged the much hyped resurrection of Glasgow's secondary sector, many "studies" of PPP should have a health warning since they are often associated with a particular outlook: the recent report from the Institute for Public Policy Research, which has links to the Labour Party, is but one example.

What this minefield requires is some solid research, particularly on the costs to the public purse. The most controversial issues here are the use of the public sector "parameters": if a public facility can be built more cheaply through PPP than on conventional public borrowing terms, then the project requires to go ahead on that basis. The argument is about how robust these comparisons are - "rigged" is one of the less charitable descriptions. The assumption has always been that public borrowing is cheaper than private. On the other hand, the costs of private borrowing have been coming down and the differential has narrowed. So where lies the balance of advantage?

There are positive lessons to be learnt, however, from the way PPP projects are planned and executed. The best examples are where parents, pupils and staff have been consulted at the design stages. This should become standard practice. Educational principles must also shape new schools, literally, rather than having them comply with the concrete. It says something for the way schools have been built in the past that Stirling Council has become so excited at such a revolutionary concept at the start of the 21st century.

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