Thursday, 11 September 2008

Back To The Future with the Scottish Futures Trust

Yesterdays announcement by John Swinney that he intends to fund all future public infrastructure projects with a new Scottish Futures Trust, to replace PFI and PPP, is at first glance to be welcomed. The trouble is that on deeper analysis it is clear there is no detail to his proposal and that the sole purpose of changing the method of funding is to prevent private companies from making profit.

The reality is that the public sector does not have construction divisions capable of building anything of significance and as a result if we want schools, hospitals and roads built we need to engage the private sector to deliver for Scotland.

Private sector companies will not, of course, work for no profit and will have to do one of two things if they are to satisfy Mr Swinney's criteria of "not for profit" build.

Either they will price jobs to show no profit by wildly inflating the cost of every item in a tender or they will all seek to act as subcontractors to a main contractor who makes no profit, while they make profits in the usual way. In other words the main contractor charges what they are charged by their subcontractors, not a penny more and not a penny less, but the subcontractors charge in the traditional way that has enabled them to make profits under PFI and PPP.

The uncertainty we face in the short term is very unhelpful, particularly when we desperately need new Barrhead and Eastwood High Schools. Yesterdays announcement is, therefore, a matter of regret and the message from East Renfrewshire must be "give us some certainty Mr Swinney and we will get on with making life better for the people who live here"!

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