Wednesday, 8 February 2017

The PPP scam

"Labour has called for an SNP minister to give evidence to an inquiry into the multi-million pound private finance initiative (PFI) school building programme after documents emerged detailing her role in its development."

"Jeane Freeman, who was elected to the Scottish Parliament in May and is now minister for social security, was previously in charge of a civil service division that helped drive the construction and renovation of dozens of schools through PFI."

"The deals, which have seen private contractors reap large guaranteed annual payments including interest, came under the spotlight when 17 Edinburgh schools built under PFI were shut after potentially dangerous building faults were discovered. An inquiry by Edinburgh Council is about to begin, and Nicola Sturgeon has said `questions must be asked` about privately financed infrastructure."

"The official tale is that PFI no longer exists in Scotland, having been abolished by the SNP. The reality is very different: the SNP correctly identified that people liked the idea of there not being any profit being made from education, the NHS and large public infrastructure projects, so introduced a system known as `non Profit Distributing` (NPD), a nice sounding name. They set up a trust known as the Scottish Futures Trust (SFT), another pretty cool sounding name, the SFT appointed a Chief Executive called Barry White. Seriously guyz, full marks for names..."
"Aside from the exact structure, the concept is the same: buy now, pay later, pay lots. The biggest cheek is using the words `Non Profit Distributing` when the only entity which doesn’t make a profit is the Scottish Futures Trust set up with public cash. But don’t take my word for it, here’s a handy quote from legal firm, Blake Morgan, who explain."
"It is therefore not a `not for profit` model. Contractors and lenders are expected to earn a normal market rate of return, as in any other form of privately-financed PPP deal."
"The NPD model is defined by the principles of enhanced stakeholder involvement in project management; no dividend-bearing equity; and private sector return capped at a reasonable rate set in competition through an open procurement process compliant with EU rules. Investors bid a rate of return in competition."
"It is important to realise that apart from this, NPD is not very different to traditional forms of PPP including PFI. In particular, the distribution of risk between public and private sector, including to construction and service contractors and their sub-contractors, is much the same."

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