At Jubilee Scotland we have been part of many campaigns calling for debt relief and the cancellation of unjust debt in the global south. Adding to the unjust sovereign debt that many nations need relief for financially, there is another type of debt that needs to be addressed by it’s systemic nature, debt incurred by climate change.  Climate change does not affect people equally. Those individuals, communities and countries affected the most by climate change are also those who have contributed the least to it. Everyday in the global south, there are droughts, natural disasters, food shortages and loss of habitat, as a result of the climate crisis. Many of the affected countries go into debt, because they lack additional finances to respond to these climate disasters.

At the same time, climate change is primarily caused by rich, high-emission countries, including the UK and Scotland. We therefore owe a moral debt to those countries and communities that suffer the most from climate change.  

The 26th Conference of the Parties (COP26) which takes place in Glasgow in November 2021 is set to be the most important UN climate conference for years. COP26 will focus on the immediate need for dramatic climate mitigation targets to be set by Scotland and other world leaders. Additionally, global south countries will be looking for finance initiatives, as more funding is necessary to adapt to the devastating impact of the climate crisis.

In partnership with Oxfam Scotland, Stop Climate Chaos Scotland and SCIAF, we have been researching the ways that the Scottish government can make a meaningful impact at COP26. The Scottish Government has previously committed to putting the voices of people affected by climate change at the heart of the conference. By increasing the Climate Justice Fund and developing a position on loss and damage and championing this issue at COP26, Scotland can show it is serious about its commitment to climate justice and set an example for other global north countries. 

Anne Funnemark, campaign director at Jubilee Scotland and lead author of the report has said: “The climate emergency is, quite literally, costing the earth for developing countries. Ahead of COP26 in Glasgow, rich countries must demonstrate that they will stand shoulder to shoulder with the world’s poorest people by offering more financial support to countries on the frontline of the climate emergency to adapt to climate change while also compensating them for their losses.”

We’re calling on the Scottish Government to :

• Significantly increase the Climate Justice Fund with new and additional finance, such as from a high-emitter tax

• Proactively call for other rich countries, including the UK, to increase their own climate finance informed by a Fair Shares analysis, while championing additionality before and at COP26

• Undertake a review of the Climate Justice Fund to build on its success, ensuring that it is fully aligned with best practice in climate adaptation globally

• Develop a position on loss and damage and use this to champion progress on it at COP26. Namely, a financial mechanism for the WIM and meaningful development of the Santiago Network

Read the report here, or through our viewer below.

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As household debt in the UK has become the highest it’s ever been on record,  many lower income households finds themselves unable to save money at all, increasing these households’ vulnerability in times of financial insecurity.  Households unable to make ends meet have been said by the Office of National Statistics  “to be living beyond their means”. 

Blaming of borrowers often occurs whenever the topic of household debt comes up. The notion that debtedness is the fault of the individual, is often fuelled by soundbites and stories in the media. Society promotes the idea that it is a self-inflicted punishment for something one person has done, because they’re the ones signing up to credit cards, taking out loans, repaying the mortgage. But most household debt isn’t because people are frivolous like many presume. Rather, it is caused by reductions of wages and benefits, redundancy, and illness. According to Stepchange’s Scotland in the Red Report, before COVID-19 the main cause of household debt was  ‘life events’, Life events are classified as unexpected shocks that put a burden on a person’s finances. In many cases, such events are costly burdens that complicate a person’s life, with no room for flexibility. 

With a third of people being affected financially by COVID-19, a wide range of people have experienced a ‘life event’ that has affected them financially.  An estimated 4 million people have been added to the number with substantial household debt since the crisis began. This begs the question of whether or not this will pave the way for people to talk about their debts and how it affects them.

At the same time, The Bank of England stated that £7.4bn of consumer credit was repaid during the first month of lockdown, the biggest net repayment in a month since 1993. A huge reduction in retail spending led to this, with the outstanding debts on credit cards remaining at £64bn. This positive sounding news demonstrates how the lockdown has added to the wealth divide in the UK. People who were able to keep working can see their debts cleared from a lack of incentive to spend, while many workers being hit by job losses and cut wages take on more debt while on furlough. If this trend continues we are unlikely to see a decrease in stigma associated with debt. It’s possible that these figures could be used by creditors to present a distorted version of events when payment holidays end, adding to the guilt of people who are unable to repay when so many others could.

A poll conducted by Citizens Advice Scotland this summer found that 1 in 4 Scottish people were concerned about their debt repayments. In response to these findings a spokesperson for the Scottish Government said that “We recognise the stress and strain debt can create and we would encourage anyone with concerns to contact organisations such as CAS to get advice and support.” While this statement acknowledges the fact that it’s a stressful time for people in debt, it passes the buck of having a conversation about debt back onto the charities that have already done so much to bring the issue to the foreground. Along with voting down the recent plans for rent controls, the Scottish Government hasn’t done much to address people’s heightened debt concerns. 

A reduction of the stigma around household debt is necessary to widen the conversation on the topic and increase the pressure on government and public lenders to make systematic changes to our flawed financial system. To make this happen  we have to harness the shared experience of COVID-19’s impact on household debt. People should not be treated like criminals for the chaotic circumstances that life throws at them. The conversation needs to be facilitated in a way where the Scottish government talks about personal debt, in a transparent way that makes people feel heard instead of at risk for speaking out.  If we don’t talk about the devastating impact of household debt openly and address the scale of the problem, we won’t build back as a better society. 

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The outbreak of COVID-19 has reminded us what is really important – looking after each other and our communities, our health and well-being, our public services. Now, as Scotland moves past a peak of infections, our attention turns to what comes next The choices made by the government now will affect our communities and our climate for generations to come. 

The recovery plan must lay the foundations of a greener, fairer Scotland for everyone. Where we reduce inequalities, strengthen public services and provide an adequate income for everyone. Where we do our fair share of climate action and restore nature. Where we all have a say in decisions that affect us.

We are proud to stand with over 80 organisations in Scotland calling for a Just and Green Recovery in Scotland. Together, we wrote to the First Minister outlining five steps for the recovery which you can read here.

This is just the beginning, we need to grow and show public support for a recovery that helps us transform our society for the better

Will you join Scotland’s movement to Build Back Better?

Sign the petition here!

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We need to assess the public health crisis that is about to explode in the Global South if debt is not outright cancelled. While most Northern countries are in the midst of fighting against the virus, the heaviest impact caused by the pandemic will be on countries in Africa, South & Latin America and Southeast Asia. With many of the Healthcare and social security systems of these countries being ill-equipped to handle the outbreak, the virus will have a devastating effect on the poorest communities. Jubilee Scotland has signed onto a new Debt Jubilee along with 200 other organisations, alling for the cancellation of debt payments paid out from global south countries to the World Bank and IMF during this time. This petition  is one of many calling on the government to take a stance on a pressing issue. It’s estimated by the Jubilee Debt Campaign that over $300 Billion in full debt cancellation is necessary for these countries to fight the virus over the next year. Some payments have been delayed so far, but by merely suspending debt payments, they only defer the problems of these countries for a little while. 

This approach ends up costing creditors nothing, but borrowing countries will have bigger repayments and higher debt risks down the line for many of these countries. Covid-19 has already led to falls in commodity prices and projected increases in borrowing costs in the global south, with limited resources at hand to handle a public health crisis. If these countries have to rely on more outside loans to fight the pandemic they will be stuck in high interest debt traps for decades to come.  One of the biggest risks that these countries are exposed to is the legal challenges that can be brought upon them for failing to keep up their payments. The G20 have called upon private creditors to delay payments, but they are not obliged to. Currently 77 countries are estimated to pay $9.4 Billion from May to December, as part of the G20 deal. Private lenders can sue governments in the UK courts for following the G20’s advice and suspending payments. But the Global South should not be pushed into this by the western institutions who have pledged to help them.

We need your help to call on Chancellor Rishi Sunak, to promote debt relief in these countries that are worst affected by the virus. By signing up to our petition, you help us put across the message that we need real debt cancellation and ways to work out debt in future that doesn’t put human lives at risk. 

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Some of the world’s poorest countries are facing health and economic crisis unlike what we have seen here. By cancelling the upcoming debt payments owed by these countries, it would be the best way to free up existing public revenue to support their people and not be burdened with debt that rises unsustainably over the next few years of recovery.

The IMF and the World Bank have called for debt payments by the poorest countries to other governments to be suspended, but with the effects of the pandemic likely to last for years, delaying rather than cancelling payments won’t solve the problem. 

Cancellation also needs to apply to all creditors, including bilateral, multilateral and private lenders, to ensure freed-up money goes to support the pandemic response, and not to pay off other debts.

Anne Funnemark Campaign director of Jubilee Scotland, said: “Millions of people in some of the world’s poorest countries are facing devastating health, social and economic crises as a result of the Covid-19 pandemic. Permanently cancelling upcoming debt payments owed by these countries would be the fastest way to free up existing public resources to tackle this unprecedented crisis and to save lives.

“The suspension on debt payments called for by the IMF and World Bank will fall short of this goal if it doesn’t apply to all lenders, and only postpones payments. Full cancellation of all external debt payments is critical, along with emergency finance that doesn’t add to debt burdens. This must be followed up with a more comprehensive and long-term approach to debt crisis resolution.”

As well as a cancellation of debt service, up to an additional US$ 73.1 billion of emergency finance will be needed to help low income economies as they respond to the crisis in 2020. This must be provided through grants, rather than loans, to stop recipient countries getting even deeper into debt. Addressing the long-term debt pressures on developing countries also requires decision-makers finally agreeing reforms to the international system for dealing with sovereign debt restructuring, once the acute Covid-19 crisis has passed. 

A joint letter– signed by Jubilee Scotland – will be sent to governments and their representatives at the IMF and World Bank today. It calls for:

• The permanent cancellation of all external debt payments due in 2020 by developing countries, with no accrual of interest and charges and no penalties. 
• The provision of additional, fresh emergency finance that does not create more debt.
• Debt cancellation and new financing to be provided free of demands for market-friendly and austerity-focused policy reforms in developing countries.
• Measures to be put in place to protect developing countries from lawsuits when ceasing 2020 debt payments.
• A process under UN auspices to be agreed in the longer term, to support systematic, timely, and fair restructuring of sovereign debt.

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—–

Written by Helen Mercer: Jubilee Scotland launch 29^th January 2020

There is a strong tendency among campaigners on PFI to see the problems with which we are all familiar – the high cost of finance, poor construction, excessive profits – as stemming from factors such as woolly thinking, incompetence, corruption, fraud, lack of transparency and weak monitoring. I argue first that while such factors may exist they are not the root causes: the problems with PPPs are systemic and structural in an environment deliberately created by governments.

A simple and curtailed history of PFI

1. By the 1990s Britain faced a pent up demand for renewed infrastructure. The IMF loan of 1976 agreed by the Labour government lead to major cuts in public expenditure, continued into the 1980s. By the 1990s major maintenance problems in public infrastructure were apparent, and often the preferred solution was to demolish the entire building and start afresh.

Pent up demand for investment in public infrastructure

2. However by the 1990s public authorities’ traditional access to public borrowing was limited by the Maastricht Treaty and its successors, together with severe unilateral targets adopted by Gordon Brown on levels of government debt and budget deficits. Central government has various tools to secure cheap borrowing rates, but these were no longer available to public authorities to address their infrastructure backlogs.

PFI BECAME THE ‘ONLY GAME IN TOWN’

3. Governments therefore gave the private sector a free hand in providing much needed public investment. Capital markets had been deregulated. Investors were seeking profitable outlets and Government was a willing tool in opening up the state sector as a source of profit. It passed legislation guaranteeing payments on PFI deals and offered special PFI subsidies to public bodies to ensure they could afford to pay the private premiums.

PROFITABLE INVESTMENT WAS UNDERWRITTEN BY GOVERNMENT

4. Public authorities were left to deal with predatory private investors and lenders. In forcing them down the PFI route the government deliberately set up a situation of asymmetric information. All the knowledge and experience was on the side of the private investors and lenders, on the public side was a urgent need for what only they could offer.

PUBLIC AUTHORITIES WERE SENT NAKED AMONG WOLVES

PFI schemes also became a key driver of the outsourcing of public services, as privately provided servicing and maintenance of the PFI building became part of the PFI contract. (This has not been the case for the variants PF2 and NPD/Hub projects but has re-appeared in the Mutual Investment Model (MIM’s) The PFI mix was a toxic one of heavy debt, outsourced servicing, together with a lack of control over the contractors themselves.

This mix of factors shows that the failings of PFI cannot be characterised as unintended or unfortunate. The solutions therefore cannot lie just in FOI requests, or judicial review or tax adjustments. These activities provide publicity and additional knowledge and are therefore useful in campaigning, but such actions cannot be paraded as solutions.

Hence the economic history of PFI shows a systemic, in-built purposeful failure in which even personal or corporate corruption, assuming it can be proven, is of minor importance in understanding the root of the problems. This picture of the system, the environment within which PFIs have developed needs to be complemented by considering the way PFI contracts are structured.

The structure of PFI contracts

To describe the structures set up through PFI and similar projects is again to broach a large and complex area so I want to focus on just one key point element – the role of the company which signs the contract with the public authority – the Special Purpose Vehicle or SPV.

It is the SPV which, in return for an annual payment, secures all sources of finance, pays building contractors and, where relevant, the service providers. They are private companies, whose shares are owned by private investors increasingly infrastructure investment funds, such as HICL, Dalmore Capital, Standard Aberdeen, 3i, Innisfree, Semperian.

The diagram shows an SPV sitting like a spider at the centre of a web of contracts – the primary contract with the public authority and then the various contracts with lenders and with the contractors.

The role of the SPV is effectively to pump public money to various private actors and most importantly to the shareholders themselves. The shareholders extend 10% of the finance needed for the project and their loan carries interest rates usually of around 10-15% and is one of the reasons why PFI is so expensive. In addition as shareholders they are entitled to dividends and these accrue from any difference between what the public body pays the SPV (in debt, payment for services etc) and the monies owed by the SPV to lenders, builders and service providers. In the case of the Scottish Non-Profit PFIs any such surplus does not accrue to investors.

The position of the SPV is the main reason why buyouts as the solution are to PFI are bound to be unsatisfactory. A buyout involves the public authority effectively ending a commercial contract under commercial terms, and as a result penalty clauses must kick in and investors and others will be compensated for the loss of anticipated earnings. They walk off with a lump sum from the public purse.

Solution: nationalise the SPVs as a way to end PFIs

It was recognition of the structural features of PFIs that prompted campaigners to look at the idea of nationalising the SPVs. It is not a buyout because no PFI contract is cancelled or ended: instead ownership of the SPV passes to the government and hence the parties to the main PFI contract are both publicly owned a situation which immediately opens new spaces for restructuring the relationship.

This has two effects which reverse the systemic problems referred to in the first part of this talk. First, control over the terms of borrowing returns to central government which can renegotiate debt with all the lenders. Secondly, the public authorities regain control over all the other contracts, including receiving the profits which had previously accrued to the owners of the SPV. Research with Dexter Whitfield has indicated that, using data up to March 2018, the elimination of SPV profits would reduce the costs to public authorities of their annual payments to the SPV by £1.4bn per year.ⁱ

Afterword

Many plans are being developed for publicly financed and provided infrastructure. However the question remains of how to deal with the toxic legacy we have inherited – from PFIs, PF2s, NPD/Hubs and now MIMs? The question cannot be continually ducked: nationalising SPVs is one option that merits serious consideration.

Read more about this in Nationalising Special Purpose Vehicles to end PFI: a discussion of the
costs and benefits.

The solution is in fact much more detailed than the outline provided in this talk and the full paper considers levels of compensation and the need to honour outstanding debts. It also considers the further changes that need to be made to move towards publicly financed infrastructure and insourced services.

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Presentation by Dexter Whitfield, European Services Strategy Unit, to meeting ‘Rethinking Private Financing of Scottish Public Projects’ at the Scottish Parliament on 29 January 2020, organised by Jubilee Scotland and chaired by Neil Findlay, MSP.

I welcome the refreshing straight-talking report on NDP and hub PPP contracts from Audit Scotland this week. I strongly recommend that the Scottish Parliament, local authorities and public bodies immediately adopt six strategies for public infrastructure projects in Scotland.

1 – Increase direct public investment in public infrastructure and stop all planned Mutual Investment Model projects

The Government should take the opportunity to increase direct public investment in infrastructure in the current period of low interest rates.

Planned MIM projects and those that have been approved with options appraisal and business cases, but yet not commenced the start of the contractual procurement process, should be stopped. The Scottish Government should support the local authorities and public bodies in arranging direct public investment for these projects.

The Mutual Investment Model (MIM) allows the public sector to invest up to 20% of the risk capital in project companies and to meet the private investment classification (off public sector balance sheet). However, the public sector, in effect, becomes a commercial partner with the private sector in sharing all the risks and rewards. This significantly deepens the degree of privatisation, extends the scope of secondary market trading in PPP equity and the takeover or merger of infrastructure funds (Whitfield 2016 and 2017b).

2 – Scotland should adopt a new public design/finance and operate model

This would have three objectives, to integrate the design and construction process, to reduce the cost of construction and to minimise the risk of delays. Two examples illustrate how these objectives can be achieved.

The UK’s Integrated Project Insurance (IPI) offers a guaranteed maximum price and protection against defects underwritten by insurance. A project alliance is formed with a Gain/Pain Share agreement under IPI in which all members of the project Alliance share in risk and reward. It was recently successfully piloted at Dudley College. The target outturn construction cost of £9.83m was agreed and exceeded by only 1.8%. The client share of the additional cost was only 0.34% of the target cost. The building was ready for occupation as planned at the start of the 2017/18 academic year.

Construction Management At Risk (CMAR) has been widely used in many US states for public building, transportation and utility projects. The client selects an architect who commences the design and later selects the construction manager/contractor, based on qualifications and track record, before the design stage is completed. The architect and construction manager work together in the final stage of the design process. The construction manager/contractor gives the client a guaranteed maximum price and coordinates all the subcontracted work. This process strengthens coordination, enhances transparency, delivers efficiencies and minimises delays (Whitfield, 2020).

3 – Local authorities and public bodies should intensify the monitoring of PPPs to identify defaults and poor performance.

Monitoring of PPP projects has often been inadequate due to inadequate monitoring staffing levels being included in business cases and contracts and over-reliance on self-monitoring by the private sector. Local authorities should now intensify contract monitoring focusing on all aspects of the quality of performance and other contractual requirements. This information should be reported to relevant committees and publicly disclosed.

Local authorities should also establish contract reviews where defaults and poor performance have been significant or systemic. They should draw on evidence from service users, community and tenants organisations and trade unions. There remains considerable scope for local authorities and public bodies to consider terminating operational PPP service contracts and return provision in-house. Where defaults and poor performance are evidenced and remain after the issue of contractual warnings by the authority, termination without compensation is a viable and legal option. In some cases a contractor has withdrawn from a contract on technical or operational grounds. There have been 27 PPP contract terminations and 12 buyouts in the UK to date (Whitfield, 2020).

4 – Establish a comprehensive and rigorous Economic, Social, Equality and Environmental Cost Benefit Analysis methodology

This should be mandatory for all infrastructure projects in Scotland. The Scottish Government should also require comprehensive and rigorous impact assessments to identify the positive and negative economic, employment, equality and environmental consequences of projects and to identify where and what form of mitigation action is required.

The quality of impact assessment is reliant on assessment of the impact on inputs, processes, outputs, equity and outcomes to establish cause and effect and the use of a counterfactual (the situation that would exist if the project did not proceed). Furthermore, employment impacts must include a full analysis of current jobs, terms and conditions, health and safety and equality practices and planned changes.

5 – The Scottish Parliament and local authorities should oppose the sale of equity in PPPs

The average annual rate of return on the sale of equity in PPP projects was 28.7% (based on a significant data sample) at the end of 2016 with acquisition mainly by offshore infrastructure funds in tax havens (Whitfield, 2017b). This evidence is in sharp contrast with the expected 12%-15% rate of return contained in PPP business cases or contract documentation.

The scale of equity transactions and offshoring to tax havens is very significant. “A total of 87.5% of Scotland’s PFI/PPP education projects (280 out of 320 schools) are currently partly or wholly owned by offshore tax haven funds. Nearly half the schools had 100% of their equity owned offshore” (Table 11, Whitfield, 2016). The NDP and MIM models in effect lock-in and legitimate public sector investment in PPP projects and the secondary market.

Whilst the sale of equity is legally permissible, there is a very strong case that it should be opposed on political economy and ethical grounds.

6 – Challenge the trend of Scottish pension fund investment in PPPs

There are direct links between Scottish public sector pension fund investments, offshore tax havens and shares in NPD and hub companies. At least four Scottish pension funds have investments in offshore infrastructure funds with stakes in NPD and hub projects. Glasgow City Council, on behalf of Strathclyde Pension Fund, has had a £30m investment in the Equitix Fund IV LP since 2016 which was extended by further £50m investment in the Equitix Fund V LP, managed by Equitix GP 5 Limited (Guernsey).

Edinburgh City Council, on behalf of Lothian Pension Fund and Lothian Buses Pension Fund and the Falkirk Council Pension Fund have investments in the Equitix Fund II LP. Equitix Ltd is one of the largest UK PPP companies and although a registered UK company it is owned by Tetragon Financial Group Limited and registered offshore in Guernsey (Whitfield, 2018).

The targeted 10% annual rate of return of these investments is not in the public interest because it ramps up the cost of public infrastructure. Likewise, public sector investments in NDP and MIM projects feed potential gains in the secondary market which may only cover the cost of risky investment in other PPP projects.

I believe these policies are essential in developing a genuine public alternative to PPPs in Scotland.

References

Whitfield, D. (2016) The financial commodification of public infrastructure: The growth of offshore PFI/PPP

secondary market infrastructure funds, ESSU Research Report No. 8,

https://www.european-services-strategy.org.uk/wp-content/uploads/2017/01/financial-commodification-public-infrastructure.pdf

Whitfield, D. (2017a) PFI/PPP Buyouts, Bailouts, Terminations and Major Problem Contracts, ESSU Research

Report No. 9,

https://www.european-services-strategy.org.uk/wp-content/uploads/2017/02/pfi-ppp-buyouts-bailouts-and-terminations.pdf

Whitfield, D. (2017b) PPP profiteering and Offshoring: New Evidence, PPP Equity Database 1998-2016 (UK), ESSU Research Report No.10,

https://www.european-services-strategy.org.uk/wp-content/uploads/2017/10/PPP-profiteering-Offshoring-New-Evidence.pdf

Whitfield, D. (2018) Ownership and Offshoring of NPD and Hub Projects: Scottish Futures Trust, May,
https://www.european-services-strategy.org.uk/wp-content/uploads/2018/06/SFT-Offshoring-report.pdf

Whitfield, D, (2020) Public Alternative to the Privatisation of Life, Spokesman Books, Nottingham.

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The post Dexter Whitfield recommends that Holyrood stops all MIM projects appeared first on Jubilee Scotland.

Last month at the Scottish Parliament we launched our report ‘Rethinking Private Financing’, the culmination of work from Jubilee Scotland over the past year researching PPP & PFI schemes. You can download and read it here. The launch was hosted by Neil Findlay MSP, who spoke to us about how passionate he was about this issue affecting Scottish people. In late January Neil Findlay had questioned Holyrood’s approach to many of the key issues the government have been quiet or unclear about when it comes to financing projects with private money, and what they plan to do in future.

Scandal at Holyrood

Derek Mackay MSP as the Finance Secretary of Scotland was the person answering these questions put forward to parliament, a mere fortnight before he was hit with a scandal that has put his career as a politican into disrepute. Mackay has been suspended from the SNP for sending inappropriate messages to a 16 year old, breaching a duty and care expected as a member of government, failing to  uphold a responsibility not to act in a way that puts young people at risk. In that context, these may be some of the last questions Mackay ever answers at Holyrood, but they still offer a snapshot of the Government’s current approach to these schemes that Jubilee Scotland are campaigning against.

Questions asked of the Scottish Government

Question S5W-27047: Neil Findlay, Lothian, Scottish Labour, Date Lodged: 21/01/2020 To ask the Scottish Government what its position is on whether local authorities could benefit from direct borrowing for public projects, rather than financing them through public private partnerships.

Answered by Derek Mackay (29/01/2020):Local authorities are entitled to use all resources available to them including their existing borrowing powers and support from the Scottish Government. It is however up to local authorities to decide how they wish to borrow and any commitments made by them are based on what they deem to be prudent and affordable.

The government’s approach to this is relatively Laisse-Faire as they have limited borrowing capacity themselves. Of course local authorities have to make financial decisions that are responsible, but the commitments that a PPP binds a council by are never prudent. They are at such high rates of interest that nobody can honestly say with what we know now, that they are affordable. They only seem that way in the short term. So by saying this, you are effectively shifting the blame onto councils for the debt they’ve accumulated, taking no moral responsibility while still introducing NPDs, a replacement model for the PFI.  What is forgotten here is while councils are allowed to use all resources available to them, there is no real alternative to PPPs supported on a national level in Scotland – there needs to be other options.

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The problem with PPP

At Jubilee Scotland we campaign for the cancellation of unjust debt worldwide. This year we have been focusing at one of the main causes of rising debt here at home and abroad, one that has long been criticised yet little has been done about. Public Private Partnerships (PPPs) are long-term contracts where the private sector designs, builds, finances and operates an infrastructure project.  This scheme in its various forms over the years has left local authorities across Scotland paying much more than needed for public projects and in some cases putting people at risk. Long contracts with high interest rates and poor building standards have left Scotland with flawed or unfinished buildings, the taxpayers sometimes paying double what they’re actually worth. It has created unjust debt problems and added unnecessary financial pressure on local services across the public sector.

The Oxgangs School catastrophe put PPPs on the map for a lot of people in Scotland. After the wall collapse 17 schools across Edinburgh that were built under the same PPP, ‘Edinburgh Schools Partnership’ were forced to close and undergo inspection and repairs. 2 years later, after the partnership told the council that all problems had been fixed, it was found that there was still issues with many of the buildings, forcing the council to undertake emergency repairs of their own. Because of the nature of these PPPs, the parties responsible are usually protected through corporate confidentiality contracts, but it’s the council that take all the blame for schools they were promised were built properly.

Private Profit over public safety

Recently two of the countries biggest hospitals have been in dispute with their own faulty PPPs. NHS Lothian is paying out £1.4m every month for the new unfinished Sick Kids Hospital with little oversight of how much of that money is going back into the public purse. The hospital hasn’t opened because of design flaws that make it uninhabitable, yet there’s nobody to take to task, nobody to answer questions why these mistakes have happened. NHS Greater Glasgow and Clyde have decided to take legal action against the contractor of both hospitals. Brookfield Multiplex were responsible for the construction of Queen Elizabeth University Hospital which opened in 2015 with many severe issues, leading to deaths in the children’s ward due to contaminated water. 

PPPs like these have led to a loss of accountability in our public services, because local councils and the government are rarely given any power to renegotiate when things take a turn. The country has a ballooning amount of debt that we have no control over as the contracts in a PPP are not usually transparent, last for decades and almost always favour the private contractor. Scotland has had issues with them, but has still has been involved in exporting PPPs to countries abroad through the UK’s Department For International Development. On an international level these Partnerships have led to corruption, environmental issues and inequality. It’s an unacceptable move for a country that committed to the Sustainable Development Goals to export schemes that undermine progress on them.

Finding a way forward

We need an alternative solution for Scotland’s problems with funding. On the 29th of January 2020, the fourth anniversary of the Oxgangs School collapse, we will debut our report at the Scottish Government. It examines Scotland’s relationship with PPPs, highlighting all the issues with the current system of private financing while presenting solutions to how we can fund infrastructure here in Scotland that the public have control of. By taking on an approach that serves the needs of local communities, we will be able to make their projects work for us instead of being being held ransom by private companies to access of our own public services.

Click here to download our report, Rethinking Private Financing of Scottish Public Projects

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Find out more about our campaign about rethinking private financing

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