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Private Finance Illusion

Evening News PFI story

The Schools Private Finance Illusion

Would you pay a mortgage for 30 years, and then let the bank keep your house?

That, astonishingly, is what the public private partnership (PPP) for Edinburgh's schools will really mean. PPP and the Private Finance Initiative (PFI) is not new money, it replaces public funding, it costs more and it takes away our say over our service.

The "partnership" is an illusion. The council sells off our schools, pays huge charges for 30 years for using them and, at the end, the private sector still owns them. The company can then name its price with no competition. Partnership? More like being taken to the cleaners.

The staff who look after the cleaning, safety and security of our schools will be sold off too. The history of PFI is that it cuts the wages and conditions of low paid workers. Any "savings" go to private profits, not the council tax payer.

Private finance has its place. But not in direct public services. There is a world of difference between a venture like the Gyle or the conference centre, and the future of our childrens education.

The private finance illusion is well documented in the Health Service. In Barnet, a £60 million hospital using PFI will cost the taxpayer £500 million over 30 years. The cost of just preparing the bid for the new Edinburgh Royal Infirmary was £3.4million, all to get a 40% cut in beds!

The consultation is an illusion too. Councillor Maginnis (City of Edinburgh Council Education Convenor) tells us she is consulting widely - first we knew! Parents and workers will only be consulted after the decision is taken.

UNISON has been surprised at how little Edinburgh's decision makers seem to know about the issue. You only have to look at the council's own PPP document alongside the claims of Councillor Maginnis to see either misunderstanding or an outrageous spin.

They claim it will bring savings. Some savings will come from closing schools. The council could have done this anyway, but this
way it can blame the private sector. However, we won't see the savings. "Any likely savings from the project will be consumed by the private sector charge for providing the facilities", says the council's own report.

Fearing charges will be high, the council will transfer "surplus properties" to the private company to try to reduce the price. "Refurbishments are less attractive to the private sector", says the report (sorry, we thought this was what it was all about) and this would show up in the level of charges. The long awaited upgrade to Drummond High is described as having "low attraction" to the private sector. Sorry, Councillor Maginnis, it will not bring savings.

They claim the risks transfer to the private sector... The private sector will own the schools. Its income from the council will be protected despite government cuts. The risk stays with the council which could face having to increase the council tax or cut other services to ensure the private firm gets its money.

If the private firm goes bust, the council will have to pick up the tab. If it does not deliver a service, the council remains liable. If it does not get its money on time, the council will have to pay penalties.

The banks (the main PFI backers) and the legislation have ensured there is next to no risk. That is why these projects are so attractive. They make money, they are a monopoly and they are secure. What risk there is, we pay for. As the report says "the structural risk of refurbishment is perceived to be much greater and this would be reflected in the charge to the council".

Sorry Councillor Maginnis, the risk stays with us and of course with the staff whose jobs, wages and conditions will be under threat.

They say the council will keep "complete control" over the Education service... With no new money and no control over buildings, the only savings a cash-strapped council can make are on direct education services. How long do you think enhanced services and basics like school meals will last under that system?

The janitor, cleaners and grounds maintenance will all work for the private company. What about vetting staff or dealing with problems? There is no point complaining to the council, they are not the employer.

The Head Teacher will have no control over the building. Bureaucracy will blossom with dockets flying around the school, the council and the private company, before they get back down to the jannie to change the light bulb! Sorry Councillor Maginnis, we will have less control.

So why are they doing this? Short-termism is the answer. We might just get some better buildings now, but we and our children will pay for years to come - long after these politicians have gone. They won't carry the can.

Our schools need real public investment. In the rest of Europe, building and repairing with public money is classed as an investment. Here, the system calls it debt. That same system allows the government to show receipts from privatisation as income. A hint there as to future plans?

The private sector is not a public service. Its first responsibility is to make a profit. Private finance done this way simply means that services will be defined on profitability, not on need.

We are a wealthy country, surely we can do better than selling of our schools and staff, while paying through the nose for a generation for the privilege.

And surely we can do better than the misleading gloss our politicians are putting on this sell-off. Let us have the real figures so we can judge. Oops, sorry, you can't have them. They are secret due to "commercial confidentiality". You'll just have to trust the council when it tells you the banks will give us something for nothing. And we all believe that, don't we?

John Stevenson
Vice Chair
UNISON City of Edinburgh Branch

 

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UNISON City of Edinburgh Local Government & Related Sectors Branch 1998-2008.
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See also...

Campaign Index

Submissions

UNISON Scotland PFI Pages

Edinburgh 2000 response

"Partnership" Document

Submissions