An SNP councillor has called on North Ayrshire Labour’s leader to admit that residents will be impacted by the burden of ‘disastrous’ PFI contracts.
Christina Larsen challenged council leader Joe Cullinane to concede that the Private Finance Initiative deals will hit constituents the hardest.
But the local Labour chief hit back at the SNP councillor, claiming that her own party’s Non-Profit Distribution (NPD) contract, linked to the new Largs Campus, will cost £343,000 each month.
Councillor Larsen said: “Labour signed these disastrous contracts when in power and have given the council an ongoing cost of £1 million a month. This burden of course has to be borne by our constituents.
“Now we hear it is Labour policy to buy back these contracts and bring them in- house.
“We supported this move in principle but how Labour can achieve it they do not say. The Scottish Labour leadership contender, Richard Leonard, supported by Councillor Cullinane, seems to be suggesting that, yet again, the SNP government should clear up Labour’s mess.
“Sadly, clearing up the mess created by Labour will not be an easy task. Particularly when coupled with the need to mitigate against disastrous Tory austerity cuts targeted at the most vulnerable in our communities.
“We would hope that the Labour administration recognise these challenges and will work constructively with the Scottish Government in future budget negotiations, rather than playing at petty party politics."
Councillor Cullinane says that experts have asserted that here is little difference between Labour’s PPP deals and the SNP’s NPD deals.
Dr Mark Hellowell, an expert on PFI, of the University of Edinburgh has stated that private equity only “made up roughly one per cent of financing under PFI” and therefore NPD is not a significant change from PPP.
However, The Scottish Futures Trust, who led on NPD deals for the SNP Government, have said that “It is important to note that the NPD model is not a ‘not for profit’ model. Contractors and lenders are expected to earn a normal rate of return as in any other form of privately-financed PPP deal.”
At the moment, North Ayrshire Council’s PPP contracts are under review and potential savings have been identified.
Councillor Cullinane added: “I have always been ideologically opposed to private finance initiatives whether it has been the Tories PFI deals, Labour’s PPP deals or the SNP’s current NPD deals.
“What really disappoints me is that the financial regulations that kept PFI debt off the public books no longer apply and the Scottish Parliament now has more borrowing powers.
“There really is no reason for using PFI deals anymore yet the SNP Government in Holyrood continue to do so, forcing local authorities to still choose between building a school under a PFI deal or not build at all.
“With the SNP preferring spin over substance on PFI it is increasingly clear that we need a radical Labour Government who will finally bring an end to all PFI deals.
“In the meantime North Ayrshire Labour will continue to keep the PPP contracts under review to seek savings unlike the SNP Group who, in power, moaned about the contracts but took no action on them.”
Two years ago, at the Scottish Labour Party conference, Councillor Robert Foster moved, on behalf of the local constituency party in Cunninghame South, that Scottish Labour commit to ending PFI and buying back existing contracts. Conference unanimously backed the policy and it featured in the Scottish Labour Party manifesto in 2016.
Councillor Foster said: “Ending PFI and buying back existing contracts has been Scottish Labour policy for two years now thanks to a conference motion by the local constituency party. I am delighted it is also now UK party policy which emphasises that only Labour, under new leadership, are serious about funding public projects .”
