Mike Small explains how and why Jeremy Corbyn and John McDonnell were right all along:
The Acronym Soup can get confusing. PPP, PFI, – they are all hurled about, but there will certainly be no alphabet learning for more than 7,000 pupils across Edinburgh locked out of school since the Easter break as building safety standards are assessed and repairs undertaken.
The schools were built under the controversial private finance initiative – PFI – by the Labour/Liberal Democrat administration at Holyrood, and there’s now even talk that some of them may need to be knocked down and rebuilt.
As a tangible symbol of rip-off Britain and the failed privatisation of the public sector, it is exemplary.
In a week where the reality gap between rich and poor and the fetid reality of our tax-dodging governing class has been laid bare, it feels like the end of a really bad experiment.
The system is discredited. The model is broken. It is crumbling before our eyes.
What have the Panama Papers got to do with schools in Edinburgh? It’s a perpetual circle.
Tax avoidance drains money from society, forcing solutions that suit private contractors and let politicians off the hook.
These building problems raise significant wider issues about how we finance big public building programmes, and it’s not just about schools.
As early as 2011, BBC Alba’s Eorpa programme revealed that some contracts included leases lasting more than a century.
The contract for the Edinburgh Royal Infirmary building lasts 25 years, but the lease on the land is for 130 years. It’s a debt we’ll have to pay for years to come.
George Monbiot has called PFI: “A racket, the legacy of 13 years of New Labour appeasement, triangulation and false accounting.”
Certainly this scheme, which started under the John Major government, was enthusiastically embraced by Blair and Brown’s administrations.
Scotland wasn’t just the testing ground for this disaster (the first PFI project in Britain was the Skye bridge), it has a far higher proportion than anywhere else.
As the writer Gerry Hassan pointed out: “Scotland has 40% of PFI schools with 8.5% of the population.” Why is that?
The journalist Mark Leftly suggests it was Brown who persuaded Blair to take PFI forward – resulting in a debt Leftly puts at a cool £222bn.
Predictably the political parties have been trying to blame each other.
The beleaguered Scottish Labour leader, Kezia Dugdale, said that “she had nothing too apologise for, for building schools”, and her Conservative counterpart, Ruth Davidson, had the brass neck to claim it was the Scottish government’s fault for not monitoring the building work.
The Liberal Democrats have called for an inquiry, a move they may regret. Others have been dismissing the whole affair as simply a case of “poor construction”.
Yet as many have pointed out, that’s a hell of a coincidence. Unison’s Dave Watson has argued that there’s a built-in likelihood of cost-cutting:
“There is a profit incentive to keep costs to the minimum. Any saving that the construction partner can make increases profits to both the construction company and the other SPV [special purpose vehicle] partners.
There is therefore a stronger cost-saving incentive than in conventional procurement.” PFI was widely used by the Labour/Liberal Democrat executive and scrapped by the SNP when it came to power in 2007.
The SNP then established the Scottish Futures Trust and introduced the non-profit distribution (NPD) model.
NPD differs from PFI in that contractors invest solely in the debt of a project, not putting in any equity and not receiving returns on their capital investment.
Critics argue that it’s not as different as its supporters make out. But the sorry saga is not just about private solutions that don’t work.
PFI fundamentally alters the relationship between the citizen and the state, so that our public bodies, buildings and institutions are no longer owned by, or accountable to, us.
It’s a failure of democracy, not just bad accounting.
In this way it’s not just a turn away from public ownership, from the protection of a non-commoditised realm in areas of common good such as “health” and “education”.
It’s a turn not just from public to private, but from public to secret. That’s a defining characteristic of the tax-avoidance culture we’re getting a glimpse of.
This is a world in which the Tory MP Alan Duncan warns us that “we risk seeing a House of Commons which is stuffed full of low achievers who hate enterprise, hate people who look after their own family and know absolutely nothing about the outside world” – and Fraser Nelson, the Spectator editor, can tell Channel 4 News: “In Britain we tend to keep these things private”.
It’s a world in which Toby Young pleads: “Winston Churchill was notoriously bad with money. He borrowed and spent with abandon, ran up huge debts, and was an inveterate gambler. If he’d been forced to ‘come clean’ about his financial affairs, he’d have been hounded from office.”
This week is reminiscent of the end days of Major’s sleaze meltdown, and it’s no coincidence that PFI is at the heart of the crumbing ideological shambles.
Yesterday it emerged that a fund registered in a tax haven owns a 20% stake in the schools.
Something called the John Laing Infrastructure Fund has its registered office in Guernsey, though a spokesman has said that the company pays tax in the UK.
We have a governing class that has been found out, and it needs to be dragged out of the shadows of backroom deals and casino culture.
Why should our children have to put up with shoddy, potentially dangerous buildings? That’s a disgrace in 2016.