Oxfam International’s Head of Washington DC Office, Nadia Daar, said:

“We commend Congresswoman Maxine Waters, Chairwoman of the HFSC, for advancing this crucial reform agenda at the IFC where the US remains the largest shareholder, and applaud IFC CEO Philippe Le Houérou for his leadership in making these reforms possible. This is a huge step forward not just for the IFC, but for how we understand the role of the private sector in development.”

“This historic decision from the IFC will ensure its investments support improvements in education without excluding children or impoverishing families. Public aid money should not be used to fund corporate-backed private school chains that fuel inequality. Other donor agencies and governments now need to follow suit.”

This freeze is in response to concerns raised by 170 organizations, including Jubilee Scotland who called on the World Bank to end support for these forms of private education that profit on the exploitation of poor children, creating wider inequality. We called for expansions of public education that everyone can access- instead of ‘low-fee private schools’ which exclude girls, impoverished children and paid extremely low wages to under qualified teachers. In Uganda and Kenya, these schools have been accused of refusing to comply with minimum government education standards.

In addition to the freeze the IFC announced an evaluation of its investments in private schools by the World Bank’s independent evaluation group. Oxfam have stated that the COVID-19 Pandemic cannot be used by any donor as an excuse to invest in for-profit education, with the need for these organisations to financing to help countries meet educational needs of millions of children out of school with no access to online classes, tutors or computers.

This move by the bank has been a good start for ending private financing that negatively impacts communities while letting private companies profit. It is time for the UK to take out their investment in these schools that are part of this problem, especially when this investment is supposed to be providing aid.

The Guardian published an article this weekend that focuses on the UK’s current position on this issue.

“The Department for International Development (DfID) has given millions of pounds to low-fee private schools (LFPS) in countries around the world, including Nigeria, Kenya, Uganda, Ghana and Pakistan. It believes the money can help improve the educational prospects of children in places where public-sector schools are poor or lacking.

But the funding, some of it channelled through DfID’s private investment arm, CDC, has proved controversial. Among those that have received UK taxpayer cash are the private school chain Bridge International Academies (BIA) which has also been the recipient of money from Bill Gates and Mark Zuckerberg.”

Bridge International Academies runs low-cost schools with the UK investing £12.3 in the company. Last year a World Bank watchdog, the Compliance Adviser Ombudsman (CAO) investigated BIA’s operations in Kenya and found allegations of human rights abuses, poor working conditions, discrimination, lack of transparency and intimidation, as well as concerns about pay, health and safety and sanitation.

At the time the DFID said they would investigate the situation, something which they are continuing to work on with the WBG. But this should be a sign that the policy of DFID investing aid money in Public Private Partnerships can can lead to situations like this. PPPs and their lack of accountability and transparency have led to fee-paying schools with questionable quality popping up in countries which need to fight for free and universal education.

Linda Oduor-Noah, project manager at East African Campaign for Human Rights commented “We have heard first-hand from other investors that they are keenly awaiting the outcome of the investigation,”she said. “I would like Bridge to respect human rights and I think that no for-profit entity should masquerade as having social agenda, when at the end of the day profit drives all decision making. People involved in the provision of public goods should never endeavour to make profit off the poor.” Bridge Schools have had a researcher arrested and have lobbied the investigation of the issues of their schools. The reseracher they arrested, Curtis Riep made the recommendation to not fund Bridge Schools as they neglect legal standards while driving profit, a clear case of a PPP that starts with an altrustic goal that become consumed by profit margins as time goes on.

As a private company they have produced research and press releases justifying the existence of PPPs that come off as strange and potentially misleading PR moves. In one report produced by BIA about the British public’s support and approval of Privately provided education in foreign countries, they say that over half of people are in support of these type of schools. They’ve done the same for the public opinon of USA citizens, but the reports use leading questions that doesn’t show any transparency of what these private schools actually are like.

These reports don’t talk about the actual work they do, but just dress up some market research, that makes it look like people are in favor of this, but It’s hard to say that the every-man on the street in any English speaking country has enough information to make a valid assessment of the issues surrounding privatization of education in Africa. With statistics that look good, they can claim that people approve of what they do without shedding much light on it at all or twisting figures and claims. They asked people if a social enterprise company like them should run schools that cost parents about $7 US dollars a month, in countries where there is a lack of other schools. Of course this sounds like a great idea when you think about what that amount of money means to you, but this is without mentioning that $7 can be a huge amount of a persons income in these countries. The teachers at these Schools work up to 65 hours per week and only take away $100 per month. In Kenya, sending three children to a Bridge school is estimated to represent almost a third of the monthly income of families living on $1.25 (94p) a day, according to a joint study by Kenya National Union of Teachers and Education International, a federation representing 32 million teachers and support staff. Instead of spending time

The European investment bank financed Bridge International Academies Ltd (BIA) through an equity fund, who became involved in a controversial PPP educational project in Liberia. Indeed, the Liberian government outsourced the lion share of its public pre-primary and primary schools to BIA, but the process was not competitive, local communities were not properly consulted, and there was not full transparency.

This is just one of many providing this form of private-for-profit education, PPPs in Africa that provide public services in a way that makes it harder to make people accountable when they can’t meet standards that they promised. The issues is that many countries can’t offer a full education system alone without some reform of the corruption within their society, in places like Liberia the education system has been broken for years. Private alternatives are marginally better for learning outcomes, but still fail students on basic human rights and protections from abuse.

The steps that the World Bank group have taken are great and hopefully open up a conversation about how to ensure the education in the global south can thrive and not be used as a tool to drive profit. But this is an issue that should be closely watched. While our government uses PPPs to provide part of our education infrastructure with mixed results, handing a contract over to private companies to overhaul a whole system in places like the Global South edges out what the ultimate aim should be in these places – quality universal free education for all children.

This article was initially posted on our Medium.com blog.

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Throughout 2019 Jubilee Scotland has been working on our campaign against Public Private Partnerships. Now, we want to share our findings in a workshop which will equip you to engage with local politicians and thereby have a say in the matters that affect your community. The workshops will give you life‐long skills that will enable you to engage with the work of local councils and MSPs.

The workshop will be lead by Jubilee Scotland’s Campaign Director, and by two guest‐speakers from Church of Scotland who have long‐standing experience in linking communities and MSPs and with participatory budgeting in local councils.

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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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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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At the book launch Dexter will discuss key points of the book and share his views on what policies and strategies are needed to deliver fundamental change. The event will be chaired by the Director of Commonweal, Robin McAlpine.

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This article has been written by Dexter Whitfield, director of the European Services Strategy Unit as an accompaniment to his new book, which will have a launch in Edinburgh later this month.

The new book Public Alternative to the Privatisation of Life sets out the scale, cost and impact of different forms of privatisation and encompasses public goods and services including the welfare state, the public realm or built environment (and right of assembly), public domain or creative commons, public sphere (collective debate and elimination of economic and social inequality) in which nature and biodiversity, climate and the environment are an integral part. A political economy framework assesses the impact of privatisation that combines the concepts of accumulation by dispossession and the primary and secondary circuit of capital. It demonstrates how privatisation is interwoven with, and is co-dependent upon, financialisation, marketisation and individualisation.

Four decades of neoliberal ideology and a decade of austerity have had a major influence in extending privatisation beyond the sale of state-owned corporations and outsourcing of support services to encompass core services, multi-service public private partnership contracts and ‘choice’ mechanisms for patients and pupils in industrialised countries and the global south.The UK developed and exported privatisation on an industrial scale since 1981 – 50 state-owned industries and corporations were sold with net proceeds of £74.9bn (£165.5bn at 2018 prices). Debt write-offs, council house sale discounts and public subsidies to privatized services totaled £174.4bn (£324.4bn current prices). In addition, 770 PPP projects and 340 PPP health centre projects led to £320bn in contractual payments. 

Decline in quality of services and jobs

Neoliberal public management focuses on outcomes but has marginalised inputs, processes and outputs, which are critical determinants of service quality, to try to conceal the full negative consequences of privatization. For example, the downward spiral in the quality of jobs, terms and conditions and pension rights is considered a contractor responsibility and of limited, if any, concern for public clients awarding contracts.

The book details the impact of privatisation in education, health and social care, transport, criminal justice and other services the UK and other countries over three decades, which evidences the consistency of failure and impact of market forces on services, jobs and increased inequality. Offshoring and tax avoidance is rife, particularly as private equity fund ownership of public assets and the growth of secondary market transactions of PPP equity to infrastructure funds accelerates.

The final part of the book analyses why it is vital to challenge new forms of privatisation and public-private partnerships promoted by global institutions and transnational corporations which will continue to embed new ways of extracting profit and control. The potential impact of technological change and automation and the continuing urbanisation and growth of megacities must also be taken into account.

I argue for the centrality of public ownership with scope for community and cooperative provision and why they must not mirror the policies and practices of social enterprises, housing associations and many other third sector organisations in capitalist economies. The development of alternative policies and plans are important because public ownership and re-municipalisation alone are inadequate. The systematic decommodification of services is necessary to strip away the neoliberal commissioning and contract culture to be replaced by new accountable governance, transparency and service user and public employee participation and radical public management. Green New Deals should be part of wider national, regional and local economic, social and environmental plans to ensure a holistic approach that integrates sector strategic plans for public housing, employment, education, health and social care with the preservation of nature and biodiversity and climate action. 

A radical public management is urgently needed to break the hold of neoliberal ideology and managerialism. Ownership alone is no guarantee that a service will be provided effectively to meet public needs and is more likely to be re-privatised. Therefore, all sustainable proposals for public ownership must be accompanied by a detailed plan for how services will be provided, managed and monitored. Increased sustainable public revenue can be obtained through progressive taxation with increased wealth and corporate taxes whilst eliminating the cost of corporate welfare subsidies and tax breaks. Corporate interests must be challenged by building new alliances between trade unions, community and civil society organisations taking joint action to advance a radical agenda. 

Book launch by Dexter Whitfield

We are holding a book launch on

Tuesday 28 January 2020, 3.30pm – 5.00pm at

Jubilee Scotland,

Augustine United Church,

41 George IV Bridge,

Edinburgh EH1 1EL.

Chaired by Robin McAlpine, Director of Common Weal. The event is free but you can book a ticket easily through our event page on Eventbrite.

Copies of the book

Public Alternative to the Privatisation of Life is available in paperback (£25.00) and eBook (£15.00) formats from Spokesman Books; paperback and Kindle (£15.00) formats from Amazon; and paperback copies from bookshops. 

Dexter Whitfield is Director of the European Services Strategy Unit and Adjunct Associate Professor, Australian Industrial Transformation Institute, Flinders University, Adelaide.

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Find out more about our campaign about rethinking private financing

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Oxgangs School wall collapsed in 2016, due to poor management by PPPs

Our schools are collapsing, hospitals are being failed and yet there’s more money being spent on them than ever, with nobody around to be held accountable. That’s the situation that our country has found itself in after years of contracts forged by Public Private Partnerships. Our infrastructure is costing taxpayers billions more than it’s worth, because of contracts that has private companies draining public funds year after year.

Scotland has been entering PPPs since the early nineties, as a way to bring investment to the country’s infrastructure. The country’s limited ability to source funds for new projects meant that PPPs were a lifeline in getting projects off the ground, but decades on they have dramatically exceeded the costs of most projects financed by government funding. High interest rates, declining service standards, and lengthy contracts have put local authorities in more debt than ever before, having a knock-on affect on our public services. Projects considered failures can still benefit private companies greatly, with tax haven investors making millions off the currently empty, unfinished new Sick Kids Hospital in Edinburgh.The current interest on Scotland’s 84 Private Financing Initiative (PFI) contracts is currently projected to cost the government and taxpayers £11.5 billion, double the capital value of the of what they’re actually worth, paid over long contracts of up to 30 years. At Jubilee Scotland, we are proposing a new way of public financing that values the public over profit.

A New Scottish Model

A Local-National Partnership is a model where Local Authorities are supported by a national body. It could take the form of a Scottish National Investment Company (SNIC) that finds the best possible solution for managing and financing infrastructure projects. It will offer guidance to local councils in legal, energy and construction issues, looking over financing packages that fit them and avoiding the traps of short term thinking and expensive problems that come from these extended contracts. In this model, local authorities and their operators will be the legal owners of their projects instead of private companies, with public interest and transparency maintained at the core of each one.

The Scottish Government is restricted by strict borrowing rules but local councils are not. A number of options are open to funding public work, such as borrowing from the Public Works Loan Board (PWLB) and the Scottish Investment National Bank (SNIB) that is set to open in 2020. There is little new risk associated with sub-national borrowing, PPPs at the moment have our councils paying large amounts in rent for public work, with complex contracts that are impossible to default on. The risk of local authorities facing bankruptcy in a Local-National Partnership is lower than in a PPP because the payments made are significantly lower. By reducing the risks of sub-national borrowing, our government can aid local councils borrow funds as a guarantor, providing oversight and assistance which allows them to work on their own projects.

When it comes to public works being built with private financing, the system has failed. We need to ensure that in future we don’t make the same mistakes in handing over our public money to people hiding it in tax havens, with no accountability for their mistakes. By taking on an approach that serves the needs of local communities, we will be able to make their projects work for them instead of being indebted to faceless organisations that only care about profit.

Find out more here about Public Private Partnerships and why we need your to help calling on your MSP to bring an end to them

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