Report slams private bidding system

Billions of pounds of taxpayers’ money are being wasted on using private firms to build and run public buildings in Scotland, says a new report from the Scottish region of the UNISON public services union.

The report, At what cost?, says that contracts for schools and hospitals under the private finance initiative (PFI) and public private partnership (PPP) schemes could be costing around £2.1 billion more than conventional public funding. And it points out that a £3.5 billion “insurance policy” is effectively paid out to contractors to cover risks associated with the contracts.

Official figures analysed by the union reveal that the private bids cost 6.4% more than estimated public sector comparators. UNISON Scotland says this means “almost £720 million is being wasted” — nearly enough to pay the whole bill for the PFI-built Wishaw General Hospital in Lanarkshire which opened in 2001.

UNISON Scottish organiser Dave Watson said these were merely “two figures from the range of ways in which private companies are profiteering at the expense of school children, hospital patients and taxpayers”.

The union says that a new capital procurement regime should be established to allow most public bodies to “develop essential infrastructure without the expense of PPP”.