SNP warns of Falkirk 'rip-off'

27th April 2001 at 01:00
THE director of education in Falkirk has admitted the public private partnership (PPP) that built five new schools in the authority would not have been his "preferred option".

Meanwhile, Mike Russell, the Nationalists' shadow education minister, virtually accused the private sector consortium that funded and built the schools of ripping off the public purse. He was speaking in Falkirk during the first session of a parliamentary investigation into the state of school buildings.

The authority's ground-breaking PPP scheme was launched last August by Donald Dewar, the late First Minister, who hailed the project as a "pathfinder" for Scotland and stumped up pound;5 million to allow other authorities to develop schemes.

But Dr Graeme Young, Falkirk's director, under questioning from Mr Russell, accepted PPP was the only option open at a time the authority was desperate to refurbish schools.

"If it were possible for five new schools to have been built by traditional Section 94, with all of the employees retained within the council, then that possibly would have been a preferable option," Dr Young said. "As it wasn't an option, we embraced PFI (the private finance initiative) wholeheartedly in order to get five schools on the ground. By and large, it has worked very well."

However, Mr Russell replied that within two years of signing the contract and building the schools Class 98, the private consortium, had received around pound;30 million from the council in return for an ivestment of around pound;70 million. "That's quite a return," he said.

Over 25 years, the consortium was due to receive pound;360 million. Mr Russell believed the authority should have been able to obtain a far cheaper deal.

In reply, Willie Anderson, former Labour education convener, said PPP was "the only game in town". If the the traditional Section 94 route - allowing authorities additional borrowing - had been available for rebuilding and refurbishing, Falkirk would have gone down that route.

Dr Young said that no authority in Scotland in the past 20 years had been able to replace half its secondaries by conventional funding. Two schools had massive structural difficulties.

But he accepted that only Scottish Executive funds allowed the council to pay the consortium charges over the 25-year period. "We have been very upfront in pointing out that we could only have funded and financed our PFI programme by dint of this level playing-field support and any other authority going down that route would have to have some income stream of some kind or another to meet the revenue costs."

Mr Russell highlighted the model of the public service trust being discussed for the London Underground, in which there is public ownership of the assets and a cap on profits.

Earlier, John Henderson, the Executive official in charge of PPP, encouraged authorities with small projects to link schools. Any project under pound;15 million might not be viable.

Avisandum, page 20

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