11 January 2008
The Private Finance Initiative is delivering real benefits but needs sustained political will and the right environment to succeed, business leaders have told a Scottish Parliament inquiry into capital investment.
In a paper submitted to the Parliament's finance committee, CBI Scotland warns the Scottish National Party government to champion the PFI's benefits more actively.
If not, it says, the private sector might opt out of providing the services that are normally part of public-private partnership investment deals.
The warning comes as Finance Secretary John Swinney begins a consultation into plans to set up a Scottish Futures Trust, a non-profit private limited company which will be 'representative of the public interest'. Its key role will be to provide more efficient alternatives to the traditional PFI models.
The finance committee is due to start hearing evidence in connection with its inquiry into different models of funding capital investment.
In its submission, CBI Scotland says the PFI has been a successful method of funding capital investment that has delivered greater efficiencies and improved service quality across a number of public services.
It adds: 'However, the challenge is to create the right environment for the PFI to flourish – the PFI needs strong political will, the right commissioning skills and a fair market for suppliers to operate.'
The paper says there must be political buy-in for the PFI to make progress and that political stability is the key to its continued success. 'There is a danger that if the Scottish government does not more actively champion the benefits of the PFI, it will increasingly be seen as a means for a private sector partner to provide assets rather than assets and accompanying services.
'This constrains innovation and flexibility in the development of future PFI projects and wider public services reform.'
According to the Scottish government consultation document, ministers favour the non-profit distributing model for building schools, hospitals, roads and other public sector projects.
But CBI Scotland questions whether such a scheme could provide real incentives for high quality services and value for money.
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