This week, readers weigh up the arguments for and against PFI, decide the Green Construction Board is missing an academic voice and urge the Scottish government to reconsider its capital budget cuts
The jury’s verdict on PFI
Regarding your story “PFI on trial”, (14 October, page 30), having heard the evidence presented, it is not clear to me that either the prosecution or defence has made a compelling case. Either side could have weighed in evidence the fact that PFI, just like any other business, has been affected by market forces that have shaped its evolution. The defence should have made more of the impact of inflation, which has accounted for much of the cost escalation presented by the prosecution. Linking costs to the retail price index is in reality inevitable and given the unpredictability of retail prices, predictions of the through-life cost of PFI projects are at best guesswork.
Another issue that has not been adequately illuminated by the defence is the extent to which private firms have sustained losses. Some PFI investors have not been laughing all the way to the bank.
Abandoning PFI would be akin to throwing the baby out with the bath water. It is well understood by the capital markets, contract documentation is well developed, it reliably delivers projects and the PFI industry contains competitively priced expertise that needs to be harnessed for growth rather than relegated to the out-tray.
Is PFI perfect? Absolutely not! It’s imperfections start with the complexity of EU public procurement rules (enshrined in UK law) that absorb huge amounts of time and money for public and private sectors.
Inevitably in this economic climate it is the headline numbers that excite attention. Anyone who is told that payment of £4m over 25 years for something costing £1m to build will be easily persuaded that the deal is a rip-off. Leaving aside inflation, much of the £3m difference will pay for maintenance ensuring that at the end of the 25 years the public assets are in good condition with no backlog investment needed. Contrast this with publicly maintained assets showing disastrous levels of deterioration, resulting in bill that can never be afforded.
I end my juryman’s review with a prediction that PFI/PPP will continue to evolve and subject to much-needed revision of process must be harnessed to deliver projects quicker and cheaper.
Edward Marston, A F Consulting, via building.co.uk
Missing board member
Regarding your story “Members of government’s Green Construction Board announced” (24 October, www.building.co.uk), where’s the independent and/or academic representation? Surely they would be able to add something?
A Thomas, via building.co.uk
Get your priorities straight
The Royal Society of Edinburgh is right to urge the Scottish Government to re-assess its spending priorities more fundamentally.
Cutting affordable housing budgets by a third and the capital budget for health projects by more than half over the next three years will not help to build the recovery Scotland’s economy needs.
Restructuring Scottish Water would free up a lot of money that should be reinvested in priority areas of capital investment.
Michael Levack, Scottish Building Federation