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'PFI FIRM CRISES HIGHLIGHT RISK AND COMPETITION FAILURES'

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A series of high-profile company failures has set alarm bells ringing in ...
A series of high-profile company failures has set alarm bells ringing in

councils and other public services across Scotland according to public

service union Unison.

In particular the collapse of PFI specialists Ballast

plc is leading to disarray in the Scottish Executive's flagship schools'

PFI in East Lothian, and the collapse at any pretence of competition in a

similar project in Renfrewshire.

'As we can see in East Lothian,' said Unison Scottish secretary Matt Smith,

'the so-called 'risk transfer' that promoters of PFI

proclaim, has been exposed as a myth. Instead of the private firm carrying

the risks of this£45m project, Ballast's parent company pulled the plug,

leaving sub-contractors unpaid, schools unfinished and the local authority

having to pick up the pieces. Let us not forget that 'risk transfer' is

being paid for by the taxpayers, but now both the construction and the

maintenance of these schools are in jeopardy. In this case also there was

plenty of notice - the parent company Ballast Needham had announced back in

March they were planning to get out of the UK'.

Ballast's collapse has also lead to a gaping hole in one of the two

consortia bidding for Renfrewshire's schools - effectively meaning there is

only one bidder for the£160m contract. It has also meant the halt of a

large window replacement scheme in Falkirk schools.

Unison intends to use this example and similar problems with other PPP

firms such as Amey to relaunch its anti-PPP campaign in Scotland in the New

Year.

Mr Smith said:

'As more and more horror stories come to light about private sector

failures, the number of firms wanting to bid for these projects gets

smaller and smaller. This means no competition - like in Renfrewshire or in

the£140m contracts for two Ambulatory Care and Diagnostic units (ACADS) in

Glasgow. And the firms that are around swallow one another up until there

are only a handful. A recent Unison report on NHS contracts shows that just

four big companies now control over half of all NHS contracts.'

Unison will be continuing to expose the financial and service failings of

PFI/PPP whilst arguing strongly for increased flexibility for public

authorities to have a real choice in finding money to invest in services.

Note

192 PFI contracts have been signed in the health sector

across the UK worth£3.5bn - 126 in England, 42 in Scotland, 18 in Wales

and 6 in Northern Ireland. Over 51% of these contacts are handled by the

'big four' firms, ISS, Compass, Sodexho and Rentokill Initial, all of whom

have been actively establishing themselves as PFI consortiums.

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