John Swinney, Scotland’s finance minister, has warned that the cost of servicing private finance initiative (PFI) contracts will severely dent the Scottish government’s finances.
Addressing the David Hume Institute in Edinburgh last week, Swinney branded PFI “one of the worst excesses of the age of financial irresponsibility”.
Swinney revealed that the cost of servicing existing PFI/public private partnership (PPP) contracts for schools, hospitals and other infrastructure projects in Scotland will soar to £867m per annum in 2011-12, up from £501m in 2007-8.
“In the course of four years I have to find £2.7 billion of new money to fund PFI,” said Swinney. “And that has to be found from a budget which is now largely static in real terms and may even fall in the years ahead.”
He accused his Labour and Liberal Democrat predecessors of massive irresponsibility. “They made vast 30-year financial commitments of growing scale and growing impact, in the full knowledge that the growth years of public spending were over,” he said.
He argued that the SNP’s approach to infrastructure investment using the Scottish Futures Trust (SFT) would ensure that “every single penny counts”.
However, critics of the SFT argue that the uncertainty over how it will work in practice means it has “paralysed” public sector projects in Scotland. The Labour MSP Andy Kerr said: “Their alternative to PPP simply isn’t there.”
This article was published in The Sunday Times on 19 April 2009