04 July 2002 | Robin Parker
The devolved Scottish government has been accused of forcing local authorities to use the private finance initiative (PFI).
The Accounts Commission said the Scottish Executive pushes the PFI route on to councils without fairly analysing ways of using procurement methods that do not involve the private sector.
The attack is a major blow to Labour’s flagship PFI approach, already under fire from critics who say it is expensive and means less public accountability.
In Taking the Initiative, an analysis of 65 PFI school schemes, Scotland’s spending watchdog found “little or no opportunity” for councils to test other approaches.
Decisions in favour of the policy could become driven by unfair impressions of poor alternatives, rather than by showing real benefits, it said.
The commission urged the executive to help councils choose between a mixture of procurement options more effectively.
It also echoed the National Audit Office’s recent call for less “spurious” price comparisons in PFI deals.
Public services union Unison said purchasers in local authorities were constantly told that PFI was “the only game in town”.
A spokeswoman said: “Public procurement is the cheapest way to raise funds for building hospitals and schools, but everything is skewed towards doing things the PFI way and purchasers are given very little option.”
The Convention of Scottish Local Authorities has also called for the executive to ensure that local authorities are made aware that public-private partnerships (PPP) or PFI are not the only procurement routes.
Schools represent almost a quarter of the £2.7 billion of Scottish PFI projects to date.
The executive has committed more than £1.5 billion in the past month to future schemes to replace or refurbish nearly 400 Scottish schools.
It said the move underlined its “continuing commitment” to PPP as a method of funding.
Andy Kerr, minister for finance and public services, said many of the projects to date would not have been completed in time if the executive had taken a traditional route.
He said the cost of each project varied, and the PPP approach gave contractors responsibility for risks during the long-term contract before handing maintenance back to the public sector.
The executive will set up a specialist procurement advisory unit to spread best practice of PFI projects later this year.