Privatisation of Public Services

– in the Scottish Parliament at 9:30 am on 24 June 1999.

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Photo of Lord David Steel Lord David Steel Presiding Officer, Scottish Parliament 9:30, 24 June 1999

The first item of business this morning is a debate on motion S1M-67, in the name of Mr Alex Salmond, on the privatisation of public services. This debate will conclude at around 12.20 pm.

Photo of Michael Russell Michael Russell Scottish National Party

On a point of order, Mr Presiding Officer. I have raised the matter of the procedure for Opposition day debates with you before. There has been discussion about whether we should follow the Westminster precedent of the Executive winding up and having the last word in each debate, or whether we should apply a different rule, similar to that applied in local authorities and elsewhere in such circumstances.

I understand that you have ruled today that the Executive should close the debate, but I ask you to consider how we could examine the matter at greater length and come to a conclusion. Will you assure us that today's decision is not a precedent for Opposition day debates-of which this is the first-but merely a convenience at this stage?

Photo of Lord David Steel Lord David Steel Presiding Officer, Scottish Parliament

This is the first Opposition day debate that we have had, so we are feeling our way, as in so many other matters. In this case, I have decided that the Executive should have the last word, as is the practice at Westminster, but I have taken into account our brief discussion in the Parliamentary Bureau. I believe that the matter ought to be considered sympathetically by the Procedures Committee when it comes into being. Today's decision should not be taken as a precedent.

Photo of Nicola Sturgeon Nicola Sturgeon Scottish National Party 9:33, 24 June 1999

This morning's debate is extremely significant, although I see that most of my Labour colleagues and all of my Liberal Democrat colleagues take a somewhat different view. The debate is significant because the subject matter is so important, but also because this is the first opportunity for the Parliament to discuss Opposition business.

As is evident in this motion, the Scottish National party is a constructive Opposition. We will criticise and oppose vigorously, where appropriate, but we will do more than that. As a party that aspires to government, we will also propose real alternatives, as we are doing today.

We have chosen the topic for this morning's debate for very good reasons. The privatisation of public services through the private finance initiative was one of the election campaign's central issues. A substantial number-who knows, possibly even a majority-of members of this Parliament oppose PFI, or at the very least have grave reservations about it. The SNP stood on a platform of opposition, as did the Liberal Democrats, the Scottish Socialist party, the Greens and Dennis Canavan. In the "Newsnight" poll, conducted before the election, 24 Labour candidates said that they were in favour of reducing the reliance on PFI. Admittedly, as we do not know the identity of those 24, we do not know how many of them are now MSPs, but we know that Labour is far from united on the issue. John McAllion once said that Tory ideas live on under the initials PFI. He was right, and he reiterated his opposition to PFI during the election campaign. It was, and is, only the Tories who, to a person, are enthusiastic supporters of the scheme.

Despite the opposition, which is shared by the vast majority of people in Scotland who want education and health to be retained in public hands, Labour is determined to press on. Labour is aided and abetted in that determination, I am sad to say, by members on the Liberal Democrat front bench, one of whom has now decided to join us in the chamber.

I was somewhat surprised to read in the partnership agreement about the commitment to £600 million of investment in school infrastructure. I was surprised because I had not heard any Liberal Democrat member boasting about that seemingly remarkable achievement. At that point, alarm bells began to ring and I asked a parliamentary question, the answer to which confirmed my suspicions. Of that £600 million, £400 million is money to support the PFI-yet another breathtaking U-turn by the Liberal Democrats. In April this year, a spokesman for the Liberal Democrats said that if they were in a position of power at Holyrood, they would press for the abolition of PFI. Here they are, in that position of power, and in just a couple of weeks they have gone from a manifesto promise to replace the expensive and inefficient PFI agreements to Jim Wallace's go-ahead for the privatisation of 100 schools.

The SNP's opposition to PFI remains, because it is expensive to the taxpayer. Currently, the Treasury can borrow money by issuing gilts at a rate of around 4.5 per cent, but the interest rate on PFI contracts is around 9.5 per cent. Common sense tells us that that is inevitable with PFI, because if private investors cannot get an attractive enough return on their investment, they will not invest. The Government tries to use the cover of commercial confidentiality to shroud the PFI deals in secrecy, but the public should know what PFI is costing them. That is why our motion calls for publication of the details and the rates of return. Jack McConnell is smiling, but if the Government is confident that PFI represents value for money, surely as Minister for Finance he will have no worries about full public disclosure.

PFI is also grossly inefficient. The negotiations take an age; in the world of private finance, time is money and profits always come before the public interest. On "Channel 4 News" on Monday night, the chief executive of Jarvis said that his company's first loyalty is to its shareholders and that any enterprise only exists because it makes money. That may be so, but it is also the reason why companies such as Jarvis should not be allowed to own schools and hospitals. The first loyalty of the people who own schools should be to the children and the first loyalty of those who own hospitals should be to the patients.

The overriding reason for the SNP's opposition to PFI is that it represents, as Mr McConnell's successor, Alex Rowley, said in 1996, the privatisation of public services: privatisation of the education system, the national health service and transport services. The assets that are created by PFI will never return to public ownership. PFI contracts are frequently referred to as mortgages, but in the real world, when someone pays off their mortgage, they own their house. That is not so in the case of private finance. Under PFI, the investor gets his money back, makes a profit and keeps the goods.

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

Will Ms Sturgeon name one PFI project in which that option is not available to the public sector?

Photo of Nicola Sturgeon Nicola Sturgeon Scottish National Party

My colleagues, including Margo MacDonald, will return to the issue of the Edinburgh royal infirmary later on, but I believe that it is one. [MEMBERS: "Answer the question."] I have taken Mr McConnell's point.

The Government's answer to the privatisation charge is that while it may be selling the asset, it is not privatising the service. That is absolute nonsense.

Before I address the example of education, I will allow Keith Raffan to intervene.

Photo of Keith Raffan Keith Raffan Liberal Democrat

I have listened with interest to Nicola Sturgeon's diatribe against PFI. Perhaps she could explain why Perth and Kinross Council, when it was under SNP control, indulged in a PFI project-the council's office accommodation-and why Angus Council, which is still under SNP control, has also gone ahead with a local PFI project. The SNP cannot have its cake and eat it.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

When members settle down, perhaps we will get around to some common sense here.

The SNP ensured that Perth and Kinross Council always delivered a process under which its citizens got value for money. [MEMBERS: "This is a speech."] This is an answer to a question and an interjection at the same time.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

Three years ago in Perth and Kinross-there is a question here for Nicola-capital spend was £25 million; this year it is only £12 million. In effect, the hand was up the back of the SNP-controlled council at that time. I had no option but to proceed with a completely failed regime. Is Nicola happy with the unholy alliance of the Labour, Tory and Liberal Democrat parties that now controls Perth and Kinross Council?

Photo of Nicola Sturgeon Nicola Sturgeon Scottish National Party

It was only right to allow the former leader of Perth and Kinross Council to intervene. We will be seeing a lot more in the future of the alliance to which he referred. Like other councils, Perth and Kinross Council has to play the only game in town. We do not accept the policies, so our attacks should be aimed at the policy makers rather than the deliverers.

I now return to privatisation and, no doubt, the denials that will come from Labour members. Let us put aside the question of how long it will be before the jobs of teachers as well as those of janitors are outsourced; before we ask the private sector to provide mainstream education services; and before we go down the road of education action zones, which exist in England, or of charter schools, which exist in the United States. The fact remains that school buildings and ancillary workers cannot be separated from the delivery of the whole education service. According to Unison, "the operation of buildings and facilities for local services are an intrinsic part of service delivery."

This is privatisation. With privatisation comes the deterioration of services, jobs and workers' conditions. I cannot be the only person who felt a shiver down their spine on Monday night when listening to the chief executive of Jarvis on Channel 4. He was asked whether he hoped to be running a couple of hundred schools in two or three years' time. He answered yes. The interviewer then suggested that that would make Jarvis a very powerful player in Britain's education system. The chief executive answered that he hoped so.

I hope not, because that chief executive's first loyalty-remember-is to his shareholders. In other words, he does not consider himself accountable to the public.

Photo of Nicola Sturgeon Nicola Sturgeon Scottish National Party

No, I have taken several interventions already.

This Parliament can and will hold Sam Galbraith and Susan Deacon responsible and accountable for the state of our education and health services. We might not always be satisfied with their answers, but at least we can ask them questions. That is not so with companies such as Jarvis, as their only loyalty is to shareholders.

It is very easy, as I think I have ably demonstrated, to demolish the case for the private finance initiative. The challenge is to come up with an alternative; the SNP has risen to that challenge. The SNP's alternative is one that the Liberal Democrats gave support to in the election campaign. We proposed the introduction of Scottish public service trusts that would be non-profit-making and would be charged to act in the public interest. Such trusts would not have to satisfy shareholders, and could issue bonds at keener borrowing rates than those that are available to the private sector-the trusts would supply services at a cheaper cost.

Our proposals have been described by the leading financier, Bill McCall, as "financially doable" and have received support from people such as Dennis Canavan, the Liberal Democrats-although I understand that they have changed their minds-and Bob Thomson of Unison. Our proposals are extremely worthy of consideration.

Photo of Nicola Sturgeon Nicola Sturgeon Scottish National Party

No, I am winding up.

I hope that in the interests of the new politics, Mr McConnell will agree to consider these proposals. He will find that they are infinitely more sensible and acceptable than his own.

In conclusion, I call on this Parliament to take an honest decision. No doubt the Labour and Liberal Democrat ministers will line up behind the Tories to support the private finance initiative, but I tell members on the Liberal Democrat back benches to honour their manifesto commitment-to do so for the first time. I tell members on the Labour back benches who know that PFI is wrong to prove a certain-absent-minister wrong and prove that, when it is right to do so, they and this Parliament are not afraid to depart from the London line.

I move,

That the Parliament condemns the privatisation of health, education, transport and other public services through the Private Finance Initiative (PFI) and Public-Private Partnership (PPP) schemes; notes the mounting body of evidence that PFI and PPP, introduced by the Conservative Government and continued by the Labour Government, are an inefficient and expensive method of funding vital public services which also undermine the pay and conditions of public service staff; calls upon the Scottish Ministers to disclose the annual expenditure commitments associated with each public project involving private finance, and the rate of return that private partners receive for the capital that they commit; urges the Scottish Ministers to examine alternatives to such private financing, and calls on the Scottish Ministers to bring forward proposals to introduce Scottish Public Service Trusts.

Photo of Lord David Steel Lord David Steel Presiding Officer, Scottish Parliament

The Executive has lodged an amendment, which appears on the supplementary business bulletin. I call Jack McConnell to move amendment S1M-67.1.

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour 9:47, 24 June 1999

I start by thanking Nicola, who showed the modesty of Frank McAveety in describing her speech, for the opportunity to reaffirm our plans for modernising public services. I was disappointed to hear that Mr Russell believes that we should adopt the procedures of local government rather than a national Parliament. We will have to agree to disagree on that point.

Public services are central to our purpose in this Parliament and to our values. We have no interest in doing harm to public services. Our partnership is founded on strengthening and expanding vital services that impact on the lives of ordinary Scots every day: new hospital developments; new and refurbished schools; standards in education; integrated public transport; and the construction of new and renovation of existing houses. Those are all public services that have been improved by this Parliament.

This is not about privatisation. We are creating and supporting partnerships between the public and private sectors to achieve high-quality investment in public services. We are committed to delivering, and are delivering, new skills for Scottish children and hospitals for those who need medical care. We say, openly and clearly, that where services will be better, where costs will be low, and where staff will be protected, we will create public-private partnerships.

We are committed to continuing with those partnerships, but we are also committed to innovation and flexibility, and to reviewing how the partnerships work in the interests of people and communities.

Photo of Brian Adam Brian Adam Scottish National Party

Mr McConnell suggests that his scheme will give flexibility, but I fail to see how that can be achieved under long-term contracts. In many of the areas that he has described there will be a need for significant changes in the lifetime of contracts; every time a change is required, we will have to go to whoever owns the facility, or manages the service and controls the staff. How will his scheme give the public sector the flexibility to introduce changes that it might require but that public-private partnerships might not be able to deliver?

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

If Brian Adam will bear with me, he will hear something about flexibility. In every case, we decide the length and nature of contracts, so we decide the degree of flexibility. We do so for the public good in every case, and are proud of that.

Nicola has demonstrated today why the nationalists lost the election. This debate will demonstrate either that they do not understand public finances or that they are using vital public services as a political football. Their plans for a public service trust would not work. Not only would they prevent any new hospitals or schools being built under the PFI, but they would threaten those projects that we have already launched and throw the PFI programme into chaos and confusion. Work on the eight new hospitals that are being built-the largest hospital building programme that Scotland has ever seen-would grind to a halt. The PFI project to build new schools and modernise older ones would stop as well.

The SNP claims that it could borrow at very competitive rates that are significantly below those that are available for PFI schemes. However, the only way to reduce the rates is by the Government guaranteeing the loans and, if that happened, the sum would be counted as public sector debt and the programme would be cut.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

I suggest to Mr McConnell that he read "Pathfinders to the Parliament", the Government's consultation document that sets out a business agenda for the Parliament and has a foreword by Lord MacDonald of Tradeston. The document endorses the idea of a public service trust in the form of a transport bond. It says:

"We believe this innovative financial arrangement should not count as part of PSBR."

Perhaps Mr McConnell's civil service brief supplies the answer to my question, but what I said is the reality of the situation.

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

I do not have to check my civil service brief; I can answer with an example from my constituency. The new hospital in Wishaw-which I hope will be called the Wishaw general hospital rather than the new Law hospital-will be funded by bonds. Bonds are in use in several of our public-private partnerships.

The form of PFI projects has changed from the dogma of the Tory years. Labour has cut through the red tape, made the process more accountable and acted to ensure protection for staff. The choice that we face today is between better public services, schools and hospitals and the Opposition's half-baked and unworkable plans.

Our highest priority is to achieve an education system with a world-class reputation. To do that, we will need world-class school buildings and information technology, which public-private partnerships will deliver. Following the recent initiatives of Falkirk Council and Glasgow City Council, seven councils are embarking on projects. In total, those initiatives will have a capital value of £400 million, a figure which is in addition to the investment of £600 million that the partnership agreement mentions. Investment in education is threatened by the SNP's proposals.

We want to have the most modern health service in Europe. That cannot be achieved in hospitals that were built in the last century. We are committed to the biggest hospital building programme in Scotland's history and to a modern approach to the delivery of public services.

Photo of Nicola Sturgeon Nicola Sturgeon Scottish National Party

The minister said that the £400 million of private finance for schools is in addition to the £600 million that the partnership agreement refers to. That conflicts with the answer to a parliamentary question that I have been given, which says that the £400 million is included in the £600 million, as an addition to the £185 million that is mentioned in the comprehensive spending review document. Would he care to clarify the situation?

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

That is a misrepresentation of the answer. The £400 million is in addition to the £600 million. If Ms Sturgeon checked her facts, she would understand that better.

It is not only in Edinburgh that a major new hospital is under construction. New hospitals are being built at Hairmyres in East Kilbride and in Wishaw in my constituency. During the next three years, public-private partnerships will deliver new projects that will be worth in excess of £500 million. That is in addition to the substantial capital investment from public funds that we plan. All those new public health service initiatives are threatened by the SNP's proposals.

It is not only in hospitals and schools that we are delivering modern public services. The new motorway between Glasgow and the English border is open eight months ahead of schedule and within budget. In relation to local authorities, I would like to commend Mr Crawford and the Perth and Kinross Council, of which he was a member, for the council's use of public-private partnerships in delivering new council offices. I am sure that the nationalist administration adopted a value for money approach when it chose to use PFI.

We urgently need to spend around £5 billion on infrastructure for water and sewerage during the next 15 years. As with our schools and hospitals, we have spent too long debating the need for infrastructure; it is time to deliver. A total of £500 million is being procured for sewerage schemes and progress is well under way. However, the process of cleaning up our beaches and our sewerge systems is threatened by the proposals of the SNP. Far from supporting public services, the SNP is playing fast and loose with Scottish services.

The Executive will support only public-private partnerships that improve public services and represent not the lowest value, but best value. We are committed to ensuring democratic control over those projects and services. I urge nationalist MSPs to drop the rhetoric of the election campaign and join in the effort to modernise Scotland. If they choose not to, they will have to answer for their actions in Edinburgh, East Kilbride, Falkirk, Glasgow, Aberdeen-and in Wishaw, too.

We have said that we will review and improve PFI and today I will set out new policies in the areas of staff, surplus land, information and the ownership of assets. Those are areas in which we can make public-private partnerships work better to achieve our objective of best value.

The issue of surplus land often arises in these projects, as in other capital investments, because old facilities are being replaced. The disposal of surplus land can raise valuable receipts to help offset the cost of new buildings but care needs to be taken to protect the public interest. In response to public concerns that we make clear our approval, I will ensure that, in future Government public-private partnerships, the assumption will be that surplus land will not be included in the contracts unless it can be determined that it represents best value to do so. That has always been the Government's assumption and I will expect the rest of the public sector in Scotland to follow that approach.

The Executive is committed to fairness and equality of treatment for workers. It is important that staff get fair treatment in public-private partnership projects. I commend the Scottish Trades Union Congress and Unison for their efforts to ensure that that happens in negotiations with us and with private companies. As the Minister for Finance, I intend to keep under review the opportunities to improve security and conditions for staff who deliver our vital public services.

Photo of Tommy Sheridan Tommy Sheridan SSP

Does Jack agree that the STUC and Unison are implacably opposed to PFI?

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

They have also played a constructive role in negotiations with the Government and the private companies that are involved in the schemes.

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

Tommy might not want to praise the unions for that role, but I would.

I can outline a step which will benefit some public sector staff. The Transfer of Undertakings (Protection of Employment) Regulations-the so-called TUPE regulations-protect many public sector conditions that employees have when they transfer to the private sector. However, the regulations do not extend to pensions. The public sector negotiates with the private sector to ensure that staff have broadly comparable pension arrangements. Last week, we announced a further step to extend that protection to transfers made under subsequent contracting rounds and, in cases of subcontracting, where that is an integral part of the primary contract. That change will apply to Government departments and their agencies where the Government is the employer and to contracting agencies. I expect it to be followed by the rest of the public sector in Scotland, including local authorities, and I will write this week to all those responsible to advise them of the change.

Photo of Margo MacDonald Margo MacDonald Independent

The ancillary staff of the Edinburgh royal infirmary have been transferred to the employ of Haden Young. Haden Young's pension scheme does not equate with the NHS scheme. Can Mr McConnell explain how the scheme is to be funded? Has he renegotiated the contract with Haden Young, or will the Health Service Executive pick up the bill for that group of workers who will lose their pension rights?

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

As Ms MacDonald will be aware, we are negotiating on the matter. We have reached a good agreement at the Hairmyres hospital and I believe that we have almost reached an agreement at the new Law or Wishaw general hospital. It would be wrong of me to comment on who might pick up the bill following those negotiations as we hope to secure the best possible deal for the public sector.

The partnership agreement made clear that, where appropriate, we would review the operation of public-private partnerships to ensure that assets would revert to public ownership. I am pleased to announce a new approach for buildings for which there is no practical alternative use at the end of contract period, including most schools and hospitals. There will be an option in contracts for those assets to revert to public sector ownership at no cost to the public sector. Other options will remain, and that situation represents maximum flexibility for the public sector and ensures important safeguards. The policy will be implemented immediately in Government public-private partnerships and I expect it to be followed by the rest of the public sector as soon as possible.

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

I will give way to Mr Wilson, because Ms MacDonald is getting a bit greedy.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

Will that policy apply to assets that have alternative uses? If it does not, there will be no loss to the private sector and significant cost to the public sector. If it does not apply across the board, why not?

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

As Mr Wilson should know because of his expertise in the area, the whole basis of the public-private partnerships and PFI is the transfer of risk. In some cases, the transfer of risk takes place where assets have conditions tied to them about their reverting to public sector ownership. In all the different cases across Scotland, in every contract, we have chosen the best possible option in the public interest, which, in the future, will mean that, in some cases, the risk will transfer at nil cost. At the moment, the risk is transferred at different values, or there is an option for that to happen. That option is important because, in some cases, public buildings will not be wanted at the end of the contract and it would be preferable to leave the risk and liability with the private sector.

I am sorry that I have taken so long, Sir David, but I wanted to take interventions. I am determined that as much information as possible is made available, provided that is not commercially confidential. Last year, the Treasury task force produced a policy statement on the involvement of staff and the trade unions in public-private partnerships. Both the Trades Union Council and the Confederation of British Industry welcomed the approach, which we will continue to take in Scotland. However, I will take the policy of openness further and, in future, will make available the annual expenditure commitments associated with public-private partnership projects, sector by sector. In the health sector, full business cases are already published. My colleague Mr Galbraith initiated that during his time as health minister. I have decided that that policy will apply to all future Government public-private partnership projects in Scotland.

Central to the partnership agreement is a commitment to innovative government, welcoming good ideas from wherever they come. By seizing that prize we will deliver better quality public services. Public-private partnerships are innovative; they are delivering new hospitals, new schools and better transport links. We are open-minded about how they work in practice and I want to discover how we can make them better and how we learn from experience. As a first step, I have announced important new policy changes: a firm public commitment to a best value approach in asset sales; new pension rights for workers; new options for public ownership of the new facilities; and more information for Parliament and interested citizens.

I hope that those policy changes will lead to better value and to public-private partnerships that operate better. We are committed to keeping the process under review. In particular, my colleague Susan Deacon will be consulting widely through the Scottish Partnership Forum on the way in which we go forward in the national health service in Scotland, using the principles that I have described today.

Politics, colleagues, is like life: full of choices. [Interruption.] That was very profound.

We must answer an important question about the direction of the Parliament. Today we vote either for the public services of the future or for the rhetoric of the past; we choose between the real projects initiated by the Government-real schools, real hospitals, cleaner water and better roads-and the negative, carping, mythical plans of the Opposition. I know what the people of Scotland chose on 6 May, and today we will deliver the future that they want, need and, most of all, deserve.

I move, as an amendment to motion S1M-67, leave out from "Parliament" to end and insert "supports the provision of high quality health, education, transport and other public services; agrees that public/private partnerships will continue to be one of the ways used to increase innovation and investment in public services where this approach represents best value; calls on the Executive to continue to work to improve the operation of public/private partnerships and seek opportunities for new types of partnership and flexible contracts which will allow assets, when appropriate, to revert to public ownership, and recognises its use in delivering high quality public services while protecting the interests of the community as indicated in the Partnership for Scotland."

Photo of Keith Harding Keith Harding Conservative 10:03, 24 June 1999

We have heard a lot of talk in the chamber about new politics. I have always been somewhat cynical, but I have to say that the new politics has arrived. In a previous existence, the minister-whom I knew as Jack-was a member of Stirling District Council. We opposed each other for eight or nine years. We did not agree on a major issue on any occasion. Now we have new politics: today I am going to agree with the minister.

Before Jack took the road to Damascus, he was proud to be a left-wing socialist. Had I proposed a private initiative when I was council leader in the late 1980s, he would have opposed it vigorously. I welcome his transformation.

Photo of Keith Harding Keith Harding Conservative

I have taken so many over the years that one more will not matter.

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

Will Mr Harding confirm that, in the late 1980s, I moved a motion to set up a covenant to finance the redevelopment of the swimming pool and leisure centre in Stirling and that he voted against it?

Photo of Keith Harding Keith Harding Conservative

We are still picking up the tab; it has cost us nearly £500,000. It is the most heavily subsidised swimming pool in Scotland.

I will get down to the nitty-gritty. We oppose the SNP motion and commend the Scottish Executive for broadly continuing the initiative that was launched by the Conservative party in 1992. The private finance initiative allows not only more taxpayers' money to be spent on delivering services, such as teaching and health care, but the use of private sources to fund the buildings in which those services are delivered. As has been said, it is somewhat ironic that the SNP opposes the initiative yet took full advantage of it to deliver projects in Perth and Angus.

These days, there are very few businesses or organisations that own and operate the buildings in which they work. It is a matter of good, prudent financial management to lease buildings and to leave the burden of maintenance and management to a specialist landlord. In most of those arrangements, the buildings remain in the ownership of the landlord at the end of the lease.

It is much better for the Government to focus on what it does best and on what it was elected to do-promoting good health, treating illness and teaching our children-rather than on investing a huge amount of scarce capital resources in buildings.

I suggest that the mover of the motion-regrettably, she is not here-asks her constituents whether they want new hospitals now, in five or 10 years' time or perhaps never. I know what the answer to that will be. At the moment, only PFI can deliver and satisfy the people's aspirations. It extends the amount of expenditure, because the underlying principle of public-private partnerships is to provide additional public expenditure rather than to replace existing public expenditure.

Today is memorable for me for three reasons. First, I have agreed with Jack McConnell for the first time in my life. Secondly, I have got my maiden speech out of the way-an absolute delight. Thirdly, my daughter is in labour-do not get excited, Jack, she is still a Tory-and I hope that I will become a grandparent for the first time before the end of the day. [Applause.]

I now have a singular ambition: I want this Parliament to work. In the future, I want my granddaughter, who is going to be called Laurie, to be able to say, "They got things together, they have made Scotland much better, and my grandfather was there."

Photo of Kay Ullrich Kay Ullrich Scottish National Party 10:07, 24 June 1999

I have in my hand a copy of a document subtitled "A Partnership for Scotland". No, it is not the "Partnership for Scotland" document, which is now more commonly known as the articles of surrender of the Scottish Liberal Democrats. This is the partnership for Scotland document that started the whole scandal of the privatisation of our hospitals and schools; this was the document in which Michael Forsyth introduced the private finance initiative to Scotland. In one telling line, Forsyth says it all: he says that the private sector will have the "scope for higher profits". Talk about being the master of understatement. At one stroke, Michael Forsyth sacrificed public need on the altar of private greed.

That was at the fag-end of the Tory Government. The SNP was not alone in opposing the theft of public assets-only the Tories were enthusiastic about giving their pals in the private sector a licence to print money at the taxpayers' expense. New Labour was incandescent in its opposition. At the Labour conference before the 1997 election, the Labour party blasted the Tories for what it described as the creeping privatisation of the NHS under the private finance initiative.

We all know that those heady days of principle are long gone. Under new Labour, the creeping privatisation of the Tories has become galloping privatisation. Scotland has six times as many PFI projects as Wales and Northern Ireland put together. Since new Labour came to power, Donald Dewar has signed away 20 times more money for PFI schemes.

Photo of Murray Tosh Murray Tosh Conservative

Will the electors to whom Mrs Ullrich appealed in the recent election value the creation, under PFI, of a major sewage treatment works in her area, which could never have been funded under conventional borrowing? Is that not practical evidence of the benefits that this approach will bring to her area?

Photo of Kay Ullrich Kay Ullrich Scottish National Party

Constituents in the area where I live and where I fought the election would value the scheme more if they were not having to pay through the nose for it.

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

Will Mrs Ullrich answer the question?

Photo of Kay Ullrich Kay Ullrich Scottish National Party

I will not give way just now.

It is a fact that nearly 30 per cent of health service PFI schemes in the UK are in Scotland, and I call that a betrayal by the very party that gave us the national health service. I know that many of the Labour members who are here today share our misgivings over PFI. Nicola spoke of the "Newsnight" survey, which indicated that a majority of Labour candidates wanted their party to move away from PFI. As a Unison member myself, I know that many Unison members-and ex-Unison officials-who are here today have particularly heavy hearts about PFI.

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

Will Mrs Ullrich welcome one thing? In that "Newsnight" survey, the specific question that members were asked was whether they would like PFI to be kept under review. Given that today I have announced four reviews of PFI policy, will she welcome the fact that their viewpoint was taken on board by the Government?

Photo of Kay Ullrich Kay Ullrich Scottish National Party

No matter which way Mr McConnell puts it, the bottom line is still the same-his party was rent asunder over PFI. During the election campaign, Unison members who were Labour candidates had to stand by as their colleagues resigned from the Labour party over the privatisation of the health service. In one week alone, they saw the resignation of Unison's local government leader, Mark Irvine, and had to stand and watch as no fewer than 1,500 Unison members at Edinburgh royal infirmary severed their links with the Labour party because the new hospital would remain in the hands of the private consortium and not with the people of Edinburgh.

Photo of Karen Gillon Karen Gillon Labour

Will Mrs Ullrich agree that Unison's head of health, John Lambie, dismissed the SNP's policy as unworkable, ill thought out, ill advised and unable to fulfil the needs of the public sector?

Photo of Kay Ullrich Kay Ullrich Scottish National Party

In the words of Mandy Rice-Davies: as an executive member of the Labour party, John Lambie would say that, wouldn't he?

The cost to the taxpayer of £4.2 billion on service payments alone-on assets that the taxpayer will never own-is a gigantic scandal. However, the real cost is in human terms. For example, the number of available beds will be cut, on average, by 30 per cent and budgets for nursing staff will be cut by up to 20 per cent. The cost that is of most concern is in the division between clinical and non-clinical workers. The privatisation of non-clinical workers will lead to the destruction of the concept of the health care team. By that act alone, PFI will effectively destroy the ethos that underpins the national health service in Scotland.

This motion calls on the Scottish Parliament to end the secrecy that surrounds PFI. If the Executive really believes that PFI represents best value, this Parliament should be allowed to examine the books and scrutinise each public project that involves private finance.

Photo of Des McNulty Des McNulty Labour 10:14, 24 June 1999

One of the key episodes in the comedy of errors that passed for the SNP's election campaign for the Scottish Parliament and convinced an overwhelming majority of Scots to place their votes elsewhere was the ludicrous position that Mr Salmond and Mr Swinney got themselves into over their notion of a public services trust. Have I got the term right? It kept being changed during the election campaign as the SNP changed tack. Mr Swinney heralded the notion as "a mechanism that would be able to provide finances at very competitive rates, significantly below those at present available for PFI schemes."

Unfortunately for Mr Swinney, the Bank of Scotland, which he had claimed as being among the two or three financial authorities sympathetic to the notion of a public services trust, almost immediately indicated that the scheme as it stood was completely unworkable. That is the reality of the situation.

Photo of Alex Neil Alex Neil Scottish National Party

Does Des McNulty agree that the Bank of Scotland's activities in recent years have not provided the best guide for judging anything? Is it not the case that, according to the Financial Times in recent months, the sub-committee established by the chancellor, Gordon Brown, to consider PFI-the so-called Bates committee-is likely to come out in favour of something akin to the SNP's proposals?

Photo of Des McNulty Des McNulty Labour

It would be interesting to find out what the SNP is proposing, as it seems to be reluctant, in various ways and in various forums, to indicate clearly what its proposal is. For years, the SNP has adopted a process of thinking of a slogan and then trying to construct a policy behind it, and that is what it has done in this instance. The press in Scotland has given the SNP great leeway over the years by refusing to take it seriously as a political party and to subject its proposals to proper scrutiny. In the process, the press has done the SNP and us a disservice. Now that we are all here in this Parliament, we have to engage in grown-up politics, to consider issues, to make hard choices and to consider carefully the options before us.

There is a huge gap between the funding needed to replace aging schools, hospitals and infrastructure and what we can reasonably expect the taxpayer to provide over the next five to 10 years. Anyone who walks around Scotland's schools, hospitals or other elements of the infrastructure, such as the water and sewerage industry, immediately recognises that gap. Much of the blame must be laid at the door of the previous Conservative Government, which consistently diverted resources away from public services and refused capital consent for education, health, housing and key environmental projects, such as water and sewerage plants. As a consequence, we have a huge backlog of under-investment, which has to be addressed as a matter of urgency, as it threatens the continuity and the quality of services that we in Scotland require and which our constituents expect us to provide on their behalf.

Photo of Des McNulty Des McNulty Labour

I will come back to Andrew in a minute.

In that context, it is correct for the Scottish Executive to look at a range of options for public investment, including public-private sector partnerships. We have to be flexible in our approach, just as any business would be, identifying the most appropriate methods of securing real improvements in provision, with service quality and value for money uppermost in everyone's mind.

We should be hard-headed in our approach to investment in public services, balancing the advantages and disadvantages of different options and making decisions on that basis. We should not use the two-legs-bad approach of the Conservatives, whose policies have denuded the public sector of assets and resources, or the four-legs-good sloganising of the SNP, which opposes public-private sector partnerships but which can give, and has given, no convincing alternatives.

The proposed schemes have the prospect of bringing substantial new investment that otherwise could not be afforded-that is the important point.

Photo of Des McNulty Des McNulty Labour

I will not give way.

In Glasgow, 28 schools will benefit from substantial capital investment-real benefits for children who are currently in the system, not jam tomorrow and not the prospect of something 10 years down the line. In health, we anticipate that extra funding of £500 million can be added to current capital allocations on the basis of existing budgets. The benefits are real and will be felt by people who are looking for improvements in these services.

We must be clear that a flexible approach-not rhetoric-will deliver. That approach involves public investment, investment delivered through public-private sector partnership and private investment linked to the development of public services. All those approaches should be considered on a case-by-case basis, so that we can ensure that they represent value for money and serve the public interest.

There are undoubtedly questions to answer about each of those alternatives and about each individual scheme, but that is how things have to be done. We should not engage in empty propaganda. In each case, this Parliament will have to exercise effective scrutiny; indeed, I would argue that one of the reasons why we are here is to engage in such a process of scrutiny.

I am delighted that, over the past two years, Treasury ministers have refined and developed rules so that many schemes now use the European Investment Bank as part of the investment package, which significantly increases the financial attractiveness of the process. I am also delighted that the Labour Government's good economic management has led to the lowest interest rates in more than 20 years, which also makes those schemes more attractive than they would have been three or four years ago.

Photo of Des McNulty Des McNulty Labour

If Andrew will let me make one more point, I will let him come in. I am very grateful to Jack McConnell, because his announcements-about surplus land, about the protection of employees, particularly on pensions, about the reversion of assets to public sector use and about the openness that will assist the scrutiny to which I have referred-represent major steps forward. There have been legitimate criticisms of these schemes in the past, but those criticisms have now been addressed.

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

Does Mr McNulty agree that the reviews announced today on issues such as surplus land have been introduced only because of the SNP's sustained pressure on and criticism of Labour's PFI policy? The scandal of Edinburgh's land rip-off is a prime example of that policy.

Photo of Des McNulty Des McNulty Labour

I said at the start of my speech that the SNP has to engage in grown-up, serious politics. I do not feel that the party has done so up to now. It has not engaged in the debate about real options and alternatives. When the SNP wants to talk seriously about what can and what needs to be done, it will be taken seriously.

Photo of Margo MacDonald Margo MacDonald Independent

I just want Mr McNulty to take me seriously. He will forgive me for using high-falutin' rhetoric when I say that the Government could afford the schemes if it were willing to scrap nuclear weapons. However, that is by the bye. Let us return to the issue of the Edinburgh royal infirmary. Can Mr McNulty explain what plans are in hand for the so-called surplus land at Lauriston, which I consider to be publicly owned land and which should remain in the public province?

Photo of Des McNulty Des McNulty Labour

As Margo is a member of the Scottish Parliament, she is perfectly entitled to ask such questions, as are members of her party. However, the reason why we have committees is to engage properly in that process. Ministers here can also respond to those questions. My point is that we have a responsibility in this Parliament for proper financial management and for delivering effective public services. That means that we have to consider every option credibly, seriously and with appropriate financial and other detailed advice. If we fail to do that, we will be failing the people of Scotland.

Photo of Patricia Ferguson Patricia Ferguson Labour

Some members have not placed their chip-cards in their consoles. It would help greatly with interventions if they could do so.

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party 10:23, 24 June 1999

When Des talked about £500 million being added to the public sector through PFI, was he aware that, according to Scottish Office outturn figures, £494 million has been cut from capital expenditure in local authorities since the Labour Government took office in 1997?

I want to nail the lie about why SNP councils have been forced down the PFI route. In 1995-96, Government support for local government in Scotland was £734 million at constant 1997-98 prices. That support has fallen in the current financial year to £328 million, which represents a cumulative cut of £1,470 million in Government capital support for Scottish local government in just four years. That is why Perth and Kinross Council, Angus Council and Moray Council went down the PFI road: they had absolutely no other option.

Peter Williams of the Council of Mortgage Lenders, speaking last week at a Chartered Institute of Housing conference in Edinburgh, described PFI as "pushing the bill out into the future".

Unison's document, "Paying for Scotland's Public Services", described PFI as "like paying off a 30-year mortgage and the building society keeping your house".

Unison and the Council of Mortgage Lenders are hardly political or economic soul mates, but what they have in common is that they recognise that somebody somewhere in the Government has to stand up and tell the truth about public policy on PFI. The truth is that PFI is the equivalent of the never-never-always paying, never owning. In order to guarantee lower taxes today, PFI means higher taxes tomorrow.

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

I will ask Mr Gibson the question that I asked Ms Sturgeon. Can he name one PFI project where the option to purchase does not exist at the end of the contract? There are some projects like that and I know which they are, but can he name any?

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

The Skye bridge is owned by the public and by the Government. Mr Gibson's statement is untrue and he should withdraw it.

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

The important issue is the option to buy. Mr McConnell talks about the option of being able to buy, but he is asking the public sector to buy at the very end of the contract after it has paid through the nose throughout the contract period.

The truth is that, to guarantee lower taxes today, PFI means higher taxes tomorrow-when the bill that Peter Williams talked about finally presents itself. PFI is more about bolstering new Labour's political virility with its key financial backers in the City than about sound economic management. The truth is that the only people who will win from PFI are the financial consultants, contract lawyers and merchant bankers who have their snouts in the fiscal trough.

Speaking to the companies that bid for PFI projects and build the infrastructure, I found, most surprisingly, that they, like local government, are involved in such projects solely because PFI is the only game in town. One senior engineer with a well-known plc recently told me that he regarded PFI as a banker's scam and that his company was more interested in building hospitals than in running them. I do not believe that he is alone in that view.

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

Not at present. I have a long speech and I think that the Deputy Presiding Officer will cut me off if I take too many interventions.

Back in the early 1980s, one of the infamous inner-London boroughs got into trouble for its involvement in a scheme whereby, to bridge the yawning chasm in its annual budget, it sold all its parking meters to a foreign bank and then leased them back from the bank for an annual fee. The Tory Government and Labour front bench condemned the scheme as loony left, but it seems to me that, far from being loonies, the people who thought up the scheme were visionaries. How could they have known that the scheme that they created in the smoky committee rooms of an inner-London council-on an agenda item sandwiched between motions on twinning with Pyongyang and giving the freedom of the borough to Gerry Adams-would later be whole-heartedly endorsed by the Tory Government and then implemented by Tony Blair's shiny, happy new Labour?

Scotland in 1999 is no different from Hackney, Haringey or Lambeth in the 1980s. Instead of leasing back our parking meters, we are leasing back schools, hospitals and other vital assets. Instead of indulging in a harmless piece of creative accountancy to get round rate capping, we are handing over public assets on the cheap and storing up an ever-increasing tax burden for the next generation.

Someone somewhere in the Labour party has to say that there must be a better way than PFI or public-private partnerships-I hope that a member in this chamber will be the first. Many Labour MSPs in this chamber have stood against PFI in the past. MSPs from trade union and public sector backgrounds have stood up against schemes that have threatened the wages and conditions of their colleagues and members; I know that those MSPs will take this opportunity to break free of the control-freak tendency in their party and stand up for what they believe in. This is an issue in which belief matters and dividing lines can and should be drawn.

In The Observer in April, Bob Thompson, the treasurer of the Labour party in Scotland, said:

"What I find repugnant is new Labour's insistence that the jobs of loyal support staff are sold off like feudal serfs. So much for partnership and team working".

In The Scotsman in June, Alex Rowley-remember him?-described PFI as "alarming" and "a back-door privatisation of council services".

As my colleague Nicola Sturgeon has already said, and as even John McAllion has said, The Scotsman, continued:

"The Tories may have gone, but their ideas live on under the initials PFI."

This is an issue on which those of us who are prepared to say that the private sector does not always know best and is not always cheaper or better must today stand up and be counted. There is more at stake than financial procedures. What is at stake is not only the ethos that runs through the entire public sector, but the morale, pay and conditions of thousands of public sector workers across Scotland. What is at stake is the very essence of why the majority of members in this Parliament resisted wave after wave of Tory privatisation plans. It would be one of the cruellest ironies if one of the first acts of the new Parliament was to endorse the ideology that so many people who fought for this Parliament were sure that we would do away with.

Photo of David McLetchie David McLetchie Conservative

As part of Mr Gibson's resistance campaign to Tory privatisation plans, will he confirm that the SNP's policy is to return at the earliest opportunity that it has-which I hope will not be very early-Scottish Power and Scottish Hydro-Electric to nationalised control?

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

As that is something that we cannot discuss today-it is a policy that the Scottish Parliament cannot deliver on-that is a distraction from the subject at hand.

I believe that PFI has had its day. If Liberal Democrat and Labour members agree, they should vote with us today to hasten its demise. If they vote on a party whip with coalition partners against what they know to be right, they will throw PFI a lifeline and shame themselves and their consciences.

Photo of Elaine Murray Elaine Murray Labour

The SNP candidate for Dumfries, Mr Stephen Norris, stated that he would be prepared to support the use of public-private partnerships for the building of the new maternity unit at Dumfries royal infirmary. If the SNP opposes PPPs, why did one of its candidates agree to support them?

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

As I said, we will support those partnerships if there is no alternative and it is that or nothing. Labour has forced us into a position where there is no alternative.

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

Has Mr Raffan moved party? Is he still the Conservative member for Delyn?

Photo of Keith Raffan Keith Raffan Liberal Democrat

Mr Gibson cannot launch a diatribe against PPP, of which PFI is a part-I will inform him of that since he does not seem to know the difference-in the Parliament and at the same time say that the SNP is forced to use PFI on the ground. The SNP is saying one thing in this chamber and doing a different thing in local government. They cannot get away with that.

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

The Liberal Democrats are the ones who have sold out. Every member of this Parliament knows that-even Liberal Democrats know it. My colleagues will specify-

Photo of Patricia Ferguson Patricia Ferguson Labour

Will Mr Gibson continue with his speech and wind up as quickly as he can?

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

I am just about to finish. We have had seven years of this, Frank, and we will have plenty more opportunities over the next four.

I have a word of warning to those who vote for PFI today. The people of Scotland have demonstrated time after time that they will have no truck with the privatisation of public services. We will ensure that every member who votes in favour of PFI today will be reminded of that on every hustings and at every public meeting, from Airdrie and Shotts to Cunninghame South and every village in between.

Photo of Keith Raffan Keith Raffan Liberal Democrat 10:33, 24 June 1999

In view of Mr Gibson's concluding remarks, I will start with a quotation from Mr Alf Young in The Herald , referring to Balfron High School in my regional constituency of Mid Scotland and Fife. He said:

"If we were to wait for the local authority to replace our overcrowded, worn-out school from its own financial resources, we could still be waiting in 2020. If we want our kids educated in the kind of modern, enriched teaching environment that implicitly tells them day-in, day-out: first and foremost this country values education, education, and education-then, like it or not, the private finance initiative is currently the only game in town."

Photo of Keith Raffan Keith Raffan Liberal Democrat

I will in a second, because Mr Gibson gave way to me. However, I will make this point first. The SNP must learn that the duty of the Opposition is not just to oppose, but to propose. Today, SNP members have not gone into detail about their Scottish public service trusts in any of their speeches, least of all in Ms Sturgeon's deplorable effort when opening the debate. She barely gave that proposal a sentence at the end of her speech. We all know why, because the policy is so deeply flawed.

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

Does not Mr Raffan accept that this is a structured debate, in which the SNP will put forward its alternative proposals? Does he not accept that the reason why local authorities are being forced down this road is that they have lost £1,470 million of capital investment from central Government during the past four years? Would not Mr Raffan rather see that £1,470 million restored over the next four years than go down the road of PFI and PPP?

Photo of Keith Raffan Keith Raffan Liberal Democrat

As Alf Young rightly says, PFI is "the only game in town."

What the SNP cannot get away with in this chamber is to launch this extraordinary rhetorical diatribe against PFI, while SNP-controlled local authorities are taking advantage of PFI.

Photo of Keith Raffan Keith Raffan Liberal Democrat

I will gladly give way to Ms Sturgeon if she resumes her seat and does not get too excited. I will give way to her in a minute.

The point is that today the SNP is saying one thing in the chamber while it is doing another on the ground, in local government. It cannot get away with that. If members of the SNP had lodged a more measured motion today, which made constructive proposals on PFI and explained their own policy-which is deeply flawed-we might have listened to them, but they have launched this diatribe while taking advantage of PFI on the ground.

Photo of Nicola Sturgeon Nicola Sturgeon Scottish National Party

It is about time that we injected some reality into the rantings of Mr Raffan. I ask him to comment on two quotations. The first is from the Liberal Democrat manifesto, which promised that it would "replace the expensive and inefficient PFI agreements".

The second quotation was said by a Liberal Democrat spokesman in April this year:

"The party is attracted by the SNP's plans for replacing PFI with public service trusts."

Perhaps Mr Raffan should consider his party's statements before the election and his party's actions in the chamber before he criticises others.

Photo of Keith Raffan Keith Raffan Liberal Democrat

We can all play the game of selective quotation, as I pointed out last week. I have the manifesto, and I will happily quote long sections of it to Ms Sturgeon. It said:

"We need a private public partnership which leads to more cost effective public sector investment strategy."

That is absolutely right. I will make points in my speech about the way in which we are working together with the Labour party. I strongly agree with the improvements to this policy that Labour is making.

Photo of Keith Raffan Keith Raffan Liberal Democrat

I am replying to Ms Sturgeon's point. The swot can wait; we know that he is good at figures, but he does not always know what to do with them.

As a party, we will also seek the appropriate alteration of the current unnecessarily restrictive Treasury rules on investment. That is part of macro-economic policy, which is reserved to Westminster. We have also made proposals on community partnership trusts, which differ from the SNP's Scottish public trusts-or whatever the SNP calls them-as the SNP well knows. We have strongly criticised its proposals, and the SNP has not responded to the detailed criticisms of its policy.

Perhaps Mr Wilson could answer this point. The main plank of the SNP proposals is that the banks will lend at more competitive rates, yet the Bank of Scotland has described the proposals as "unworkable". The SNP has latched on to the fact that Mr Peter Burt wrote to the SNP to say that the Bank of Scotland regarded its proposals for Scottish public trusts as "not feasible", as if that were somehow better than "unworkable". I do not know what the difference is between "not feasible" and "unworkable", but the SNP is grasping at straws.

The Royal Bank of Scotland has attacked the SNP's policy too, saying that the SNP has looked only at the funding side, not at the important contribution that private sector management makes to PFI projects. That is why the SNP policies are so deeply flawed; the trade unions have said so, too.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

I am grateful to Mr Raffan for giving way during a key contribution to the debate. The Bank of Scotland criticised our proposals not because of the funding mechanism, which it supports, but because we refused to downgrade the conditions of workers and employees within the projects. We protected them, which perhaps Mr Raffan should support.

Will Mr Raffan take the opportunity to outline the Liberal Democrats' plans for community partnership trusts, which appear in three words in the Liberal Democrat manifesto and nowhere else?

Photo of Keith Raffan Keith Raffan Liberal Democrat

There is a whole column in our manifesto, and I will gladly send it to Mr Wilson afterwards.

Mr Wilson cannot get away with what he said about the Bank of Scotland. The Bank of Scotland said that the SNP proposal was "not feasible" and was "unworkable as it stands". The SNP has not developed its policy since February. SNP members have come to the chamber today to attack the Executive. If the SNP is to be a responsible and mature Opposition-if, in Mr McNulty's words, it is to grow up as an Opposition and as a political party-SNP members cannot come to this chamber and not explain in detail their own policy and not respond to the points made about the deep flaws in it, which have been exposed by banks and business, let alone the Scottish Executive.

SNP members must explain their position to their constituents. I was astonished at Ms Sturgeon today: she lambasted the private sector, almost like Tommy Sheridan in drag. She lambasted the private sector in an extraordinary way, ignoring the fact that the seats that the SNP holds at Westminster-and here-are former Tory seats. I am not surprised that SNP members do not say those things as loudly in their constituencies, attacking the private sector as having no redeeming features whatever, since they took over those seats from the Tories. The most bizarre aspect of their performance today is that they have emerged as such unreconstructed Jurassic park socialists.

I am glad that Mr McConnell's views have developed and that Labour's policies have developed and moved closer to the Liberal Democrats. In partnership we have come together to make improvements on the public-private partnerships, of which-I say again to Mr Gibson-PFI is just one version.

Our party has made its position quite clear: through the partnership agreement with the Labour party, the two parties have moved together on this policy and are working to improve it. We welcome the minister's initiatives today, which seek to improve the operation of public-private partnerships. We are developing new types of partnership and flexible contracts-which is crucial-and we will allow assets, when appropriate, to revert to public ownership. That is in our manifesto; the Labour party agreed to it and it is now in the partnership agreement.

I accept that not all PFI projects produce good value. The Skye bridge is the most notorious example. However, the good thing about this Parliament and the committee system that we have set up is that the Finance Committee, of which I am a member, can examine PFI policy and the Audit Committee can examine particular projects. I support the motion in the name of my colleague John Farquhar Munro, the member for Ross, Skye and Inverness West, which calls for an investigation into the Skye bridge contract and the toll order. The more the Audit Committee examines particular projects and the more the Finance Committee examines the operation of PFI policy, the more accountable the Executive will be, the more the policy can evolve, and the more it can be refined and improved.

This Parliament, brought about by devolution, will lead to increased accountability in terms of PFI projects. We should all welcome that. SNP members have chosen today to play party politics in a knockabout fashion- [Interruption.] Frankly, if they do not like the heat, they can get out of the kitchen. If that is the way that they want to play it, we will respond in kind.

Photo of Keith Raffan Keith Raffan Liberal Democrat

Hang on a second. [Interruption.]

We have to examine the policy in the Finance Committee and examine particular projects in the Audit Committee. This is a committee-oriented Parliament, and that is the way in which we can play a constructive role in the development of PFI policy.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

Notwithstanding Mr Galbraith's rather ungallant comments, I am grateful to Mr Raffan for giving way. It might be more appropriate for this chamber if Mr Galbraith stopped sniping from the sidelines.

Can Mr Raffan pick up on the point in our motion that seeks to improve existing PFI projects by opening them up and making them more transparent, allowing the Finance Committee to examine them? Does he agree with me and with Geoffrey Robinson that there should be absolute transparency in all projects, not only in the sectors mentioned by Mr McConnell?

Photo of Keith Raffan Keith Raffan Liberal Democrat

I am all for transparency and I am all for openness. From what I have heard-and I listened closely to the minister-he supports that as well. Transparency I want; it is the SNP's diatribe and rhetoric that I am not having anything to do with. This is a complex and important issue, and the SNP has yet to explain its policy.

The crucial point is that partnerships between the private and public sectors produce capital projects earlier and more efficiently than otherwise would be the case. That is why I mentioned the case of Balfron High School. Either the SNP has to explain and develop its policy convincingly so that its inherent flaws are removed, or it has to accept the alternative to borrowing, which is tax. We know that the SNP is the tax party-

Photo of Keith Raffan Keith Raffan Liberal Democrat

No, I am not going to give way any more because I am near the end. I have given way a lot-well, all right, I did not realise that it was the fundamentalist; I will give way to the fundamentalist. He is the SNP's internal opposition.

Photo of Alex Neil Alex Neil Scottish National Party

Much appreciated.

Mr Raffan quoted Alf Young saying that a school required PFI. Is it not the case that if we had adopted Liberal Democrat policy, putting 1p on income tax and earmarking it for education, PFI in education might not have been necessary at all?

Photo of Keith Raffan Keith Raffan Liberal Democrat

Mr Neil would make that point, wouldn't he? Kay Ullrich is sitting next to him; she has quoted Mandy Rice-Davies once already-who am I to quote her a second time? But he would say that, wouldn't he?

We made it quite clear that, having looked at the books, we would raise taxes if we thought it necessary. That is the whole point. Our policy position on tax was quite distinct from the SNP's, and our position was clear over a long period, not announced overnight like the SNP's. Last week, we saw the fundamental contradictions at the base of SNP economic policy-a contradiction on interest rates that SNP members have yet to explain, a contradiction on spending, a contradiction on tax, and now a contradiction on PFI, which they use in the councils that the SNP controls, but attack in Parliament.

SNP members cannot get away with it. I ask them, in the name of the new politics, to work with the other three parties in the chamber. At the moment, there is a grand coalition against them on this issue. That is why I am surprised that they launched this debate. Their own policy is deeply flawed, and now they are breaking the unholy alliance that was developing with the Tories. We thought that the new love affair would develop into something more permanent, but SNP members have split it asunder by taking the stance that they have on PFI, giving the Tories no alternative but to sue for divorce. There is a vast majority in the chamber in favour of developing PPP and PFI. The SNP should work with us to develop these policies. It is time for it to stop being a destructive Opposition and become a constructive one.

Photo of Mary Scanlon Mary Scanlon Conservative 10:46, 24 June 1999

Keith Raffan is always a hard act to follow, but I will try my best. I am proud to speak as a member of the party that initiated PFI. I am very comfortable standing by our manifesto commitments and doing what we said we would all along-voting on the issues in our manifesto.

Photo of Mary Scanlon Mary Scanlon Conservative

Give me a second please, Richard.

There may be times when Keith and I will agree or disagree, but I hope that we and others in the chamber will put the people of Scotland first, rather than hark back to comments by Mandy Rice-Davies, Alex Rowley or whoever else.

The important principle is being lost in this debate. That principle is the delivery and provision of public health and other services to the people of Scotland. When, many years ago in the House of Commons, the Conservative party argued that tenants should be given the right to buy their council houses, the consumption of the good was the most important thing, rather than who owned it. Rather than saying "public good, private bad", we should try to focus the debate on the delivery of the services.

Photo of Mary Scanlon Mary Scanlon Conservative

Could Richard let me get started? I know that he loves intervening when I am speaking, and we seem to be developing a relationship here. [Laughter.]

Photo of Sam Galbraith Sam Galbraith Labour

She has been snubbed by the SNP.

Photo of Mary Scanlon Mary Scanlon Conservative

If Richard insists on being helpful, he can go on.

Photo of Richard Simpson Richard Simpson Labour

I am not so sure about the relationship, but I am trying to be helpful.

I am going to shock the chamber, because the party that introduced the first privatisation of the health service in the United Kingdom was the Labour party. The health services in general practice are owned privately by banks, by building societies, by doctors-they are not owned by the national health service. In 1966, the Labour health minister Robinson introduced that; the Conservatives cannot claim to have done so.

I hope that Mary Scanlon will agree that there has never been a complaint about that aspect of privatisation of the health service, because it is pragmatic and it has worked for the people. That is what PFI and PPP are about, as Mr Raffan has said.

Photo of Mary Scanlon Mary Scanlon Conservative

I do not think that any of us has a monopoly on good ideas, and I am delighted to hear that we took the idea from the Labour party and that the Labour party has now re-endorsed it. I welcome the minister's re-examination of the guidelines and proposals. As mature politicians, it is our responsibility to examine those proposals and to move forward with the commitment to PFI.

Des McNulty was still harking back to the Tory years. I believe that if we are to get a serious grip on Scotland's public finances, many Labour-controlled councils should endorse PFI and public-private partnerships for reasons of service quality and value for money. The debate should focus on providing services. I do not believe that any patient turns up at a hospital and asks who owns it. Patients are more concerned about standards of treatment and waiting times. I have never heard a parent say that they were concerned about who owned a school. Parents, children and we as politicians should be concerned about the standards and the provision of education, rather than about who owns and maintains the building.

Looking across the chamber, I seem to remember that, during our debate on Holyrood, the point was clearly made that the business of this Parliament could be conducted equally well whether we were tenants in this chamber or owners in the other chamber. It is the business and the decision-making that matter.

I am pleased to endorse the excellent idea of PFI and am delighted that Labour members have come on board and done so, too. According to the information centre, PFI projects in Scotland that have been completed or are in the pipeline have a value of more than £2 billion. That is serious money; I would like to hear those who are opposed to PFI make a realistic and honourable suggestion of an alternative means by which we can provide that level of public services.

Photo of Patricia Ferguson Patricia Ferguson Labour

A number of members have indicated that they wish to speak in the debate. To try to accommodate them all, I will impose a time limit of four minutes from now on. I ask members to adhere to that.

Photo of Malcolm Chisholm Malcolm Chisholm Labour 10:50, 24 June 1999

Clearly, this will be a dominant controversy in this Parliament, but I hope that it can also-perhaps somewhat improbably-be a defining issue of the new politics and one where we make the quantum leap of realising that both sides of the case have some merit.

There is concern about PFI. Tommy Sheridan did not reveal a state secret when he said that the Scottish Trades Union Congress was officially opposed to it. I know that many of my constituents are as well. The SNP, however-and Mr Gibson in particular, when he suggested that the Labour party was doing this for some ideological reason-overstated the case when it criticised the Labour party. The reality is that the Labour party is doing this for the practical reason of speeding up investment in public services. I know that the SNP has put forward an alternative, but that would fall foul of the public borrowing rules. That is a dilemma which the Labour party has had to address.

I think-and again some members may find this improbable-that there are grounds for consensus around the Labour amendment because of its use of the words "best value". This Parliament provides an excellent opportunity to scrutinise every proposed PFI or PPP deal.

There is massive controversy about whether those deals are better value than traditional funding in the long term. In each case the Government says that it has let a deal go ahead because it offers better value, but many economists and experts say that there is doubt about the public sector comparator. The existence of this Parliament makes scrutiny in great detail of those deals possible for the first time. On that basis, I am prepared to accept the Labour amendment.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

Scrutiny is very important in regard to PFI. Has Mr Chisholm been told by ministers in his own Government about level playing field support? That is the process whereby local authorities were encouraged to become involved in private finance initiatives. Has he been told by the Labour front bench how much level playing field support exists for local authorities for future private finance initiatives? Further, has he been told that it may well be exhausted?

Photo of Malcolm Chisholm Malcolm Chisholm Labour

There is clearly an issue about how affordable PFI is. Although it brings forward investment, there is a limit to the number of projects that can be undertaken because of the commitment to pay for them over 30 years. We cannot get into that area today, but many of the committees of this Parliament should examine it in great detail over the next few months.

Photo of Malcolm Chisholm Malcolm Chisholm Labour

I have only four minutes. I would like to take more interventions, but I must speed up and miss out things that I had intended to say.

Labour has always said that best value is about not only cost, but quality. Apart from the issue of whether PFI is cheaper in the long run-which I have doubts about-there is the issue of staffing. Concern has been expressed about the effect of PFI on unified staff, particularly in the health service.

I welcome Jack McConnell's announcement today on the conditions of NHS staff and, I presume, education staff in PPP projects. However, there is still concern about the loss of a unified NHS staff. The Select Committee on Health at Westminster examined the issue of NHS staffing and-while not opposing PFI in the health service in England-called for a moratorium on new NHS private finance initiatives until the effect on staff had been monitored. That had the support of the Labour majority on the committee. There is widespread concern about the work force issues and we must monitor them closely to assess the effect on staff morale and the details of staff conditions.

I am pleased that the pension arrangements have been modified at the new Royal Infirmary. That has been of great concern to many of my constituents who work in the health service. We must keep a close eye all along on the effect of PPP deals on the work force and conditions of service.

At the end of the day, along with staffing, the key issue is best value. How does paying over 30 years using this method compare with the traditional method of funding? This Parliament should address that key issue.

On condition that that debate and scrutiny take place, I am prepared to support the Labour amendment, although it is well known that I have serious reservations about PFI.

Photo of Adam Ingram Adam Ingram Scottish National Party 10:55, 24 June 1999

I shall preface my contribution to the debate with some observations on its historical context. I know that that is a wee bit risky given that history is a little out of fashion in the Labour party.

Last year we celebrated 50 years of the national health service-probably the single most important peacetime achievement of any Government this century. It was the greatest leap forward for social inclusion that this country has ever seen. Everyone in our society was given entitlement to quality medical provision free and at the point of need regardless of his or her means. It was Aneurin Bevan, the great socialist architect of the NHS, who proclaimed the dawn of a new age in this country-an age in which no one would be denied the support that was necessary to climb out of the miseries induced by illness, ignorance, poverty and unemployment. That support would be there from cradle to grave. At last that supreme article of socialist faith-

"From each according to his abilities, to each according to his needs"- was given hugely practical and popular expression. For the past 50 years, public investment and reinvestment has been efficiently financed by low-interest, long-term loans from the Public Works Loans Board. That has allowed succeeding generations to fulfil and to sustain Bevan's vision. That vision is now being systematically undermined.

The ticking time bomb that is the private finance initiative is set to blow away the legacy of the past 50 years. In the motion we are asking Parliament to stop that bomb going off. The rush to PFI means an ever-increasing takeover of public assets such as schools and hospitals by private consortia that are driven by the profit motive rather than by public interest.

In the debate, my colleagues have described and will describe how public needs are being overridden; I would like to concentrate on why that is happening. PFI was essentially a Tory creation that was born out of Thatcherite ideology.

Photo of Adam Ingram Adam Ingram Scottish National Party

Yes, it was. It was a creation that was determined to push back the boundaries of the state, and the welfare state in particular. The official justification, however, was the need to reduce the public sector borrowing requirement and to meet the Maastricht criterion that any deficit in public finances should be less than 3 per cent of gross domestic product. Gordon Brown and the new Labour leadership have not only inherited that line from the Tories, but have-if anything-outdone their predecessors in their zeal to control and cut back Government expenditure on vital public services.

What is the current deficit as a percentage of GDP? Are we struggling to meet the Maastricht limit? The answer is an emphatic no. We are not just comfortably within it, but within it by a factor of no less than 10. The current deficit as a percentage of GDP is a mere 0.3 per cent. In other words, the new Labour Government has the room to increase public borrowing and spending by a massive £22 billion this year, and by as much if not more in each of the next four years. It will still be able to meet the Maastricht criteria for economic and monetary union.

There is scope for a massive increase in capital expenditure. Scotland's share would be around £2.5 billion this year and every year up to and including 2003-04. To put that sum into perspective, last year, Government spending on capital projects in Scotland was only £1.7 billion. The value of all the PFI projects in Scotland-those that have been signed up for and which are in the pipeline-is only £2.8 billion.

Photo of Patricia Ferguson Patricia Ferguson Labour

I ask you wind up now please, Mr Ingram.

Photo of Adam Ingram Adam Ingram Scottish National Party

The reality is that this new Labour Government has the wherewithal to launch a massive public works programme without recourse to public-private partnerships, but it clearly lacks the political will to do so. It would appear that Gordon Brown will use the billions in his rapidly accumulating war chest to buy the votes of middle England with more cuts in personal income tax. Without doubt, it is a case of retaining power for its own sake, rather than exercising power meaningfully for the common weal.

Photo of Tommy Sheridan Tommy Sheridan SSP 11:01, 24 June 1999

The speech that we have just heard is the kind of speech that would have been made by a Labour member five or 10 years ago. It was full of socialist content. Some of the members on the Labour benches used to be socialists.

The problem with today's debate is the stench of hypocrisy and arrogance. The British Medical Association is one of the most respected bodies in the national health service; Unison is the largest trade union in Scotland; and the Scottish Trades Union Congress represents some 900,000 organised trade unionists in Scotland, yet all those bodies are completely and emphatically opposed to the private finance initiative. That is why this debate is arrogant. Are the BMA, Unison and the STUC wrong and Labour, the Liberal Democrats and the Tories right? Do the parties have the monopoly on wisdom?

Jack McConnell warned Opposition members that we had better get in line or, in places such as Glasgow and Falkirk, the voters would take umbrage. In Glasgow, which used to be rock-solid Labour territory, there is no longer a single safe Labour seat. In Falkirk, my respected companion, Dennis Canavan, gave youse a gubbing-to use the parlance of Glasgow. If Jack thinks that PFI is popular and that we will lose support if we do not get in line, he is on a hiding to nothing.

Politics is about priorities. Mr Ingram gave us an illustration of how this Government's policies are all wrong. Three years ago, under the Tory Government, a campaign was started in Glasgow, which was taken up by the Glasgow Evening Times, to raise £1.5 million for an MRI scanner for the children's hospital at Yorkhill. Three years later, the money has been raised through public donations.

In the same week as that campaign was launched, the Tory Government announced that it would support the British contribution to the Eurofighter project at a cost of £15 billion. That is the politics of priority-Governments that can afford £15,000 million for weapons of destruction, but cannot afford £1.5 million for an MRI scanner for a children's hospital.

The problem that faces Labour members is that the Scottish electorate cherish our public services and the fact that they are delivered on the basis of need, not to satisfy the bank balance of shareholders. That is why we talk about best value when we talk about health, our schools and our houses. The director of the City of Glasgow Council's housing department had to admit that the best way to achieve best value in delivering a complete renovation of Glasgow's housing stock was through conventional public investment. The problem is that, because of the archaic public sector borrowing requirement rules that we use in Britain-the only country in Europe to use them-that method of financing has been forgotten.

Photo of Murray Tosh Murray Tosh Conservative

Does Mr Sheridan accept that, to an extent, conventional methods of public investment have been the problem? All the houses developed in the 1950s, 1960s and 1970s were funded in that manner. The councils did not build any life-cycle costings into the plans and no money was set aside for renewal and refurbishment, so that in Glasgow around 77,000 houses are now of almost no value because so much work is necessary to bring them up to standard. That is the result of the conventional approach to funding and it is the legacy of not looking at efficient property management for decades.

Photo of Tommy Sheridan Tommy Sheridan SSP

I completely deny that that is the reason why we are left with those problems. They are due to a lack of planning. There was a willingness to construct thousands of homes to deal with massive overcrowding in areas such as Govan and the Gorbals in Glasgow, which resulted in the building of flat-roofed tenements. That would have been nice and they would have lasted for ever in places such as Greece, which has a nice climate, but not in places such as Glasgow where it is always teeming with rain.

However, that does not mean that we should now throw the baby out with the bath water. We should plan properly and invest publicly in housing to produce homes that, unlike the homes that they have now, people can afford and in which they can live and bring up their families with plenty of space and in comfort. The director of Glasgow's housing department was forced to admit that such homes could be delivered more quickly through public investment.

Photo of Patricia Ferguson Patricia Ferguson Labour

I ask you to wind up, please.

Photo of Tommy Sheridan Tommy Sheridan SSP

There is clearly more than enough finance available to make proper public investment in public services and to save the jobs of our janitors, cleaners and domestics who are going into the private sector. I do not want to undermine Mary Scanlon, as she makes her comments honestly-some members of other parties do not make theirs as honestly-but she is a Tory. She says that the priority is who owns things. I will bear that in mind when the party that I represent has replaced the Labour party as the party of working-class men and women in Scotland.

Photo of Patricia Ferguson Patricia Ferguson Labour

Will you wind up now, please?

Photo of Tommy Sheridan Tommy Sheridan SSP

When the Scottish Socialist party approaches the Bank of Scotland, the Royal Bank of Scotland, ICI, Unilever, ScotRail and British Telecom, we will tell them that who owns them is not the problem and that that is why we are taking them back to run them in an accountable and democratic fashion, in the interests of ordinary people and to produce goods on the basis of need, not profit.

Photo of John McAllion John McAllion Labour 11:08, 24 June 1999

When Nicola Sturgeon introduced this debate, she said that the fact that the Scottish National party was introducing a motion showed that it was being a constructive Opposition. She then went on to attack personally Jim Wallace, the Liberal Democrats and the Labour party. She even managed to drag poor Alex Rowley into it, as if he did not have enough problems of his own. If that is her being constructive, I would not like to see her in destructive mode.

We know what the real idea behind today's motion is, simply by listening to the radio. This morning, the SNP spin doctors had already told the radio broadcasters what this debate was all about-a blatant attempt to break the Liberal Democrats from the coalition. Newspaper journalists have also been told that this motion is a blatant attempt to embarrass Labour. In other words, this motion is not a serious attempt to debate PFI or an opportunity for this Parliament to address the issue properly; it is, as usual, the old politics of Westminster-party politicking to get at other political parties.

Mr Gibson gave it away when he reminded everyone here that how we vote today will be used at every hustings that members attend between now and the next election. I, for one, am certainly not going to be fooled into supporting an SNP motion that is aimed directly at helping the nationalists and damaging my party.

Let us look at the SNP motion. First, it condemns the privatisation of public services. There is nothing wrong with that-I do it myself. The clear implication behind that condemnation is that public services should always be publicly provided-again something that I would not fall out about. Why, then, has the SNP-controlled council in Angus, which has been under SNP control for 16 years, never delivered its housing maintenance and repair service through a direct labour organisation? It has never had a direct labour organisation and it has always delivered that public service through the private sector. Of course, it gets an advantage from doing that because the wages in the private sector are lower, the conditions are not so good and there are no apprenticeship schemes. The SNP gets the benefit of boasting about low rents and council taxes in Angus, but it does that by delivering public services through private means. I will give way to the provost who was responsible for many of those policies.

Photo of Andrew Welsh Andrew Welsh Scottish National Party

Mr McAllion is entirely wrong. He should do his homework before making such accusations against the SNP. The administration that I led employed direct labour; we encouraged local business and we used direct labour where appropriate. If Dundee City Council came anywhere near the record of Angus-the best-run council in Scotland-the citizens of Dundee would be much happier.

Photo of John McAllion John McAllion Labour

I have done the homework. Mr Welsh ceased to lead the administration in Angus in 1987. At the moment, there is no DLO in Angus providing the housing and maintenance repair service, but there is one in Dundee. That is the difference. Our council is Labour controlled, whereas Angus Council is SNP controlled. As Mr Raffan said-I do not always agree with him-members cannot say one thing here and do something entirely different on the ground. No one is twisting the SNP's arm up its back in Angus. Labour-controlled Dundee has been able to deliver a DLO and so could have Angus if it had chosen to do so.

Photo of John McAllion John McAllion Labour

Sit down. I have given way once and do not have time to give way again.

There is a public-private partnership at Baldovie in my constituency, where we are replacing the old incinerator with a new waste-to-energy plant. That is being done, and the plant is to be operated, under a public-private partnership. Members may say, "Fine, that is another example of Labour going down the privatisation road." Why, then, did Angus Council volunteer to become a partner in that public-private partnership? It was not forced to. It asked to get in because it wanted a way forward.

Photo of John McAllion John McAllion Labour

I will not give way. The honourable lady-sorry, it is not very honourable. Mrs-I cannot remember her name, but she can make her own speech in her own time. SNP members cannot come here, preach socialism and then return to their constituencies and practise capitalism.

Photo of John McAllion John McAllion Labour

That is what they do across Scotland.

Public-private partnerships and PFI came about because there were problems with public funding. We all know that. Limits were set on the amount that government could spend and borrow. As a result, many public projects were left lying on the shelf gathering dust. PPP and PFI are meant to break that log-jam and allow public projects to be developed.

Photo of John McAllion John McAllion Labour

I have serious reservations about PFI. The idea of a privately owned and privately run hospital in the NHS is anathema to me as is the idea of forcing public sector workers out of the public sector against their will. That is not why I came into politics, but those of us who are opposed to it have to find a practical alternative. That is what this Parliament is about.

It is no good Tommy fighting about the Eurofighter project. For the next four years, we are working within a devolved polity and a devolved budget. If we want an alternative to PPPs we had better start to find it. We will not find it in debates like this; it is for the Finance Committee and the Audit Committee. We must examine the Treasury definition of public sector borrowing requirement and invite Treasury officials to come here and explain why they will not follow the European method that is used everywhere else and allows councils to borrow money privately.

The motion calls for the Parliament to consider public services trusts. I am an economist-sorry, I am not an economist-and I have the advantage of not needing to pretend to know everything. I do not know whether public services trusts will work, but the Finance Committee could find out.

Photo of John McAllion John McAllion Labour

Let us leave the work of examining PFI to the committees and they can report back to the Parliament. Then we can have a proper debate and not the pseudo debate that we had so far this morning.

Photo of Gil Paterson Gil Paterson Scottish National Party 11:14, 24 June 1999

What a gift we will leave our children as a result of PFI; we will build a hospital or a school at 10 times the real cost and give them the invoice.

Photo of Sam Galbraith Sam Galbraith Labour

It does not cost 10 times the amount.

Photo of Gil Paterson Gil Paterson Scottish National Party

It does, Sam, if you do your sums, and the worst thing about it is that not only will they pay the invoice, they will end up not owning whatever they paid for.

Photo of Gil Paterson Gil Paterson Scottish National Party

No, I have only four minutes.

Taking up the Tory point, what business in its right mind would do the same thing? What business would lease property at 10 times the capital cost? I lease property, but I do not do it at 10 times the capital cost. I would be bankrupt if I did and no sensible business person would ever do it.

Here is a wee challenge for members. Who would buy a house-say in Bearsden, Sam-for £100,000 and end up paying £1 million in the knowledge that, in 30 years' time, the Halifax will chap on the door and evict them? Members should press their green button if they say yes to that.

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

Will the member take a point of information?

Photo of Gil Paterson Gil Paterson Scottish National Party

No, thanks.

I have made the point before, being a central belt MSP, that I think the worst PFI-the first and the worst-is the Skye road bridge. Daily, people up there are paying through the nose. That pushes up the price of bare essentials-if people go up there, they will see what the prices are like.

Photo of Mary Scanlon Mary Scanlon Conservative

Does the member agree that people living on Skye can buy a book of tickets to travel over the bridge, which costs them less than it did to go over on the ferry?

Photo of Gil Paterson Gil Paterson Scottish National Party

The thing is that they have only one way to go and that is across that bridge. I know that it is a new bridge in the Highlands and that it is for the benefit of people on the mainland. To be quite frank, I am ashamed of the situation on Skye. I am ashamed that it has gone on for so long and I think that that shame transverses this chamber. The Liberals have made a big noise about it. The solution that they have reached in the partnership agreement is to stagnate the charges-bully for them. I suggest that Liberal members do not give up their day job if that is the best deal they can do. I would not like to see them do a bad deal. For me, their suggestion is like a policeman saying to a battered woman, after he chaps on the door, "We know that you are battered, and that you get battered every night, but the good news is that it ain't gonna get any worse."

Somebody mentioned nuclear weapons and Trident. Would not that be a great thing for PFI? People could not do it. We all know that when Trident is redundant-frankly, it is redundant now-nothing but a mess will be left. It will cost as much to decommission it as it cost to put it in place. We are lumbered with that.

What are we ending up with? Things that we do not want under PFI, such as Trident, and things like that that we cannot get rid of-and we do not get to own the stuff of communities, such as schools, roads and hospitals.

Photo of Gil Paterson Gil Paterson Scottish National Party

No. If the profit element is taken out-not the interest element, as people need to earn money-of the cost of the new royal infirmary, we would end up with two schools.

I know that there are some good people on the Labour benches.

Photo of Gil Paterson Gil Paterson Scottish National Party

No, I am not giving way. I know that there are some good people on those benches and that they are not happy with PFI. The difference is that they will follow orders from London and Tony's plan.

Photo of Gil Paterson Gil Paterson Scottish National Party

For me, PFI always has been and always will be a rank, rotten Tory policy, which, unfortunately, some good people over there will follow.

Photo of Margaret Smith Margaret Smith Liberal Democrat 11:20, 24 June 1999

Like Mr McAllion, I do not know everything. I am not an economist and finance is not my strong suit. My husband would agree with that. I am much better at spending money than saving it and I do not know much about Treasury rules. No doubt we will all become more acquainted with the subject during the next four years.

Not one member is unaware of some of the drawbacks of PFI and PPP. We might not know the full facts, but we have all heard of examples that have concerned us and given rise to questions. On the other hand, we all agree that there is a need for substantial capital investment in hospitals, schools, roads and other public infrastructure, and we have to work within the fiscal and financial limitations of this Parliament. That is the background to this subject.

As a Liberal Democrat candidate in Edinburgh at the election I had severe concerns-I still do-about many of the elements of the new royal infirmary. I could bandy figures around-and Mr McConnell and Mr Galbraith would jump to their feet and tell me that they have figures to bandy back at me-but the reality is that many of us still have concerns.

My three main concerns have always been: value for money for the Scottish taxpayer; workers' rights-particularly the local example of pensions at the royal infirmary, but also examples across Scotland-not only in health projects but in schools projects that I am acquainted with; and the need to retain public assets in public hands if necessary and desirable.

Everybody in this chamber is well acquainted with the fact that, with those concerns in mind, the Liberal Democrats have entered a partnership agreement to deliver stable government for Scotland. In the partnership agreement, we have taken forward the idea that best value is crucial. The role of the committees will be crucial in ensuring that best value is integral to all projects from now on.

We must also tackle the problems of workers' rights. I was pleased to hear Mr McConnell's comments today. Many of us will look into that matter with him to get some meat on those bones.

As the representatives of the people, we want to ensure that we keep the right to retain public projects when that is in the best interests of the public.

I echo many of the comments made by Malcolm Chisholm, John McAllion and others.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

I asked Malcolm a question about level playing field support. Perhaps Margaret is familiar with that area because she comes from a local authority background. I asked him whether the front bench had informed him that the level playing field support that is available to local authorities-which encourages them to go down the route of PFI-is all but exhausted. Has the front bench of Margaret's party told her how many new local authority projects may be financed through PFI without that level playing field support?

Photo of Margaret Smith Margaret Smith Liberal Democrat

No, it has not. It is in the hands of the committees of this Parliament to ask the Government that question.

That brings me to the subject of committees. Mr Raffan and others have spoken about the roles of the Finance Committee, the Audit Committee and the subject committees. It is for all of us to examine this issue. What Mr McConnell has told us today, and what is in the partnership agreement, moves the PFI-PPP debate forward. It does not take the debate to its conclusion, but it is better than where we were. One of the roles of the committees is to move the debate forward again.

I will not attack the SNP for using PPP and PFI projects locally. I will give four reasons why I will not: Craigmount High School, The Royal High School, Muirhouse Primary School and Silverknowes Primary School-four different school projects in my area. I have concerns about PPP and PFI, but I am more concerned to ensure that the children I represent get the best education possible from Edinburgh City Council and this Parliament.

Photo of Margaret Smith Margaret Smith Liberal Democrat

Ultimately, we are about delivering the possible-not the perfect world. We will not achieve the latter but, with a bit of pragmatism we can make progress, move away from dogma and consider the alternatives. In the Health and Community Care Committee and elsewhere I am happy to consider any options that anyone in this chamber-be they SNP or anything else-proposes to give the people and the children of Scotland the public services that we must deliver.

Photo of Kenny MacAskill Kenny MacAskill Scottish National Party 11:25, 24 June 1999

As I drove care-free and toll-free down the M8 last week, I had the opportunity to listen to a folk music tape by the American folklorist Woody Guthrie, on which he sang a song about the American outlaw Pretty Boy Floyd. The lyrics say:

"As through this world you wander you see lots of funny men, some will rob you with a six gun, and some with a fountain pen."

In my previous existence as a defence agent I met many people who would rob with a six gun. I have now landed in a chamber where I am meeting the individuals who would rob us with a fountain pen.

The robbery started under the Tories. It was maintained under a Labour Administration, and it is now accelerating under this Lib-Lab partnership. Under Thatcher, public utilities were privatised. That was robbery of, and private gain from, a public asset at public expense. Privatisation went to such an extent that Harold Macmillan said it was selling off the family silver. Labour jumped up and down in raptures in support of that.

Photo of Frank McAveety Frank McAveety Labour

Can Mr McAskill remind me: was Mr Macmillan alive when PFI was introduced?

Photo of Kenny MacAskill Kenny MacAskill Scottish National Party

I did not know the answer, but my colleague Alex Neil has kindly told me that he was. Macmillan was referring to the privatisation of public utilities. PFI is privatisation. Labour is not selling off the family silver; it is selling off the family furniture, because we are dealing with health, education and housing-the fundamental issues for individuals.

I wish to comment on alternative funding and Mr McConnell's amendment. I will also touch on the points made by Mrs Smith. Mr McConnell talked about the choices. I do not want to go into great detail about Scottish public sector trusts-my colleague Andrew Wilson will do that-but Mr McConnell raised an issue that I was going to comment on: the Scottish transport bond. I note that Mr McConnell talked about the civil service brief "Pathfinders to the Parliament". I do not speak to many lords. Lord James is always polite to me.

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

Mr MacAskill referred to a civil service brief, and that is accurate. The point is that we already use bonds in our public-private partnerships, including the one that is being used to pay for the new hospital in my constituency of Motherwell and Wishaw.

Photo of Kenny MacAskill Kenny MacAskill Scottish National Party

I may have misheard Mr McConnell, but I thought that he referred to a civil service brief. I have a personal letter from Lord Macdonald of Tradeston-he even signed it "Yours, Gus Macdonald"-and I was pleased to receive it. The letter enclosed a copy of the report of the pathfinder groups and said:

"This report brought together the findings of the 13 Pathfinder Groups that I set up and I am very pleased to enclose a copy for your consideration."

In the penultimate paragraph, Lord Macdonald said:

"I would therefore hope that the report will be given serious consideration by Members of the Scottish Parliament and the Scottish Executive and I commend it to you."

I presume that Gus Macdonald did not send something to me that he did not also send to Mr McConnell. In that document is raised the question of, and the options for, the Scottish transport bond, which doubtless Andrew Wilson will elucidate. We are quite happy to look at alternatives if Mr McConnell is not prepared to accept the Scottish public sector trust, but we must move away from PFI, PPP or privatisation.

That brings me to the issue of schools, as raised by Mrs Smith. As far as I can see, PPP means privatisation for parents and public. Mr McConnell talked about ownership. I have the document "Private Partnerships: Investing in Education" from the education department of Edinburgh City Council. Mr McConnell said that ownership remains with the public sector-or he alluded to it. Lo and behold, under the heading "Why PPP?", at the end of paragraph three, the document says:

"In practice, this means that the Council will lease rather than own the proposed new or refurbished PPP buildings and receive funding from the Scottish Office to meet rental costs."

That is what the City of Edinburgh Labour group said.

Photo of Rt Hon Jack McConnell Rt Hon Jack McConnell Labour

The point I was making-if Mr MacAskill listened to that part of my speech-is that the option for public ownership remains when the contracts expire and when the public interest asks that it should remain. In almost all of the PFI contracts currently in existence in Scotland, that option appears in the contract-although none of our colleagues have so far been able to name any, despite their grandiose claims-and in most cases for a nominal value.

In future, where there is no practical alternative use for the project at the end of the contract period, during which cost-lease arrangements apply, there will be the option of transferring at no cost. I would be grateful if Mr MacAskill would welcome that.

Photo of Patricia Ferguson Patricia Ferguson Labour

Mr MacAskill, you must wind up your speech.

Photo of Kenny MacAskill Kenny MacAskill Scottish National Party

I will do my best.

The ERI contract makes no mention of a buy-back. However, I will skip what I intended to say about the details of PPP in Edinburgh and deal with this amendment. Mr McConnell thinks that his is a favourable proposal. I notice that Mrs Curran, who has previously commented on international affairs, is sitting at the back of the chamber. I want to know why, if this is such a good option for the Scottish Parliament, we are restricting it to this chamber and this nation. Why, when throughout the world, particularly in the third world, there are requirements for homes, schools and hospitals, are we not giving others the benefit of the wisdom that we have acquired through Mr McConnell and his colleagues?

Photo of Kenny MacAskill Kenny MacAskill Scottish National Party

Why do we not suggest PPP to the United Nations and the G8 as the way in which to revitalise the third world? If it is good enough for us, it is good enough for them. If it is not good enough for them and they will not accept it, why is Mr McConnell imposing it on our people?

Photo of Sylvia Jackson Sylvia Jackson Labour 11:31, 24 June 1999

The debate on PPPs must rank alongside that on student finance as one of the most contentious that faces this Parliament. In practice, both debates have been oversimplified and have failed to capture the complexities of the issues involved, as many members have pointed out. In the case of PPPs, one mistake has been the failure to recognise that what have been called PFIs and PPPs are not all the same. There is variation and they are evolving.

From some of the speeches that SNP members have made, there would seem to be no middle ground. We have polarised the arguments, so that people are either for PPPs or against them. I suggest that we need to consider the middle ground.

My approach to this matter starts from basic principles. For most of the past 20 years, the public sector has been starved of resources; most of us agree on that. There is a real danger that, as J K Galbraith, one of the century's most distinguished economists, said, we will have "private opulence but public squalor".

If that is to be avoided, we must act, and act quickly.

My approach to this matter recognises that many of the PFIs that have been introduced to date have been unsatisfactory. The balance between public and private gain has been wrong, and much of the private gain has been made at the expense of public sector workers. The balance may have been wrong because too many of the public sector bodies that have negotiated with the private sector have lacked the expertise that is necessary for them to do so effectively.

I criticise much that has happened in the past. The Tories' policy-that the private sector is always best-flies in the face of all experience. There are too many examples, whether from privatisations or PFIs, of the private sector making excessive profits at the expense of the public purse; we have alluded to those already. However, that does not mean that there are no circumstances in which I could support the use of private sector finance for public sector development. Rather, it means that I want there to be much more scepticism about private sector involvement. It means that I want far more controls on the operation of public-private partnerships-controls that will protect the rights of workers who are employed by those partnerships. It means that I want there to be an opportunity for assets that have been developed through the PPPs to revert to public ownership at the end of the defined period. What we have heard today from Jack McConnell gives us hope that that will happen.

Members will have seen the briefing that has been provided by the Scottish Parliament information centre and noticed the frequent references to an article by Professor David Bell. Professor Bell is a constituent of mine who works at the University of Stirling. He argues for a mix of public and private funding to develop public assets, so that risk can be shared. However, an important element of what he proposes has received insufficient attention. He argues that the public sector must learn from its mistakes and not bargain with the private sector from a position of weakness. At the moment, too many negotiations with the private sector are carried out by bodies that have little experience in such matters. That must change, so that there is a clear focus for negotiations with the private sector. Malcolm Chisholm has made some good points about how we can make progress on scrutiny and monitoring of that process.

Amendment S1M-67.1 seeks to capture many of the points that I have made. It does not reject the notion of public-private partnerships, but recognises that our approach to such partnerships needs to evolve further and that we need to learn from experience. I commend the amendment to the chamber.

Photo of Margo MacDonald Margo MacDonald Independent 11:36, 24 June 1999

I will take Jack McConnell's invitation at face value and put campaign rhetoric behind me; I will ignore the fact that Keith Raffan called me an unreconstructed Jurassic park socialist.

Having got that out of the way, I apologise for not tackling the huge issues-the ideological issues-that are implicit in the private ownership of public services; PFIs involve a partnership, which implies ownership. I will also put aside the unkind jibes that I made about where we might find an alternative source of funding-by getting rid of nuclear weapons-and address myself to the situation here in Edinburgh.

I have an urgent reason for bringing the chamber's attention to the reality of PFI. Although I welcome a sinner who has repented, and what Jack McConnell said today about making wee improvements at the margins, I fear that, for some aspects of the Edinburgh royal infirmary contract that has already been signed, and for the contract that is waiting to be signed, that may be too late.

There is a second PFI at the Edinburgh royal infirmary-for equipment. Before the election, I was concerned because every piece of advice that I had received-from the British Medical Association, from the people who work in the area that will be covered by the second PFI and, of course, from Unison-suggested that it would, almost certainly, lead to a lowering of the standard of clinical care. The equipment PFI covers equipment that is patient-critical. The equipment is operated by a health team that is made up of the same people who purchase, install and maintain it, and who train the staff in how to use it. They are an integrated part of the medical care. Under the equipment PFI, they would be split off from the rest of the clinicians and nursing staff.

I was also very concerned about the total absence of British health care companies from the companies that tendered for this PFI, because I do not want the bedside bookkeeping of the American health care companies in Edinburgh's new royal infirmary. I am sure that Mr McConnell does not want that either.

I have a compelling third reason for revisiting the PFI. When the minister sums up, I want him to give us an assurance that the Executive will re-examine the books for the Edinburgh PFI. I have here a letter dated 31 May. It is addressed to the executive directors of the Lothian University Hospitals NHS Trust, and is from the heads of service and business managers at the royal infirmary. It says that "effective planning of and communication about the entire project has ground to a halt" and that "plans for equipment specification and purchase are causing deep anxiety."

Most worrying of all for the people who will use the privatised new infirmary at Little France, the letter states that few of the service heads and managers "have gained confidence about the level of service they will be able to provide after going through this process."

During the election campaign, some new Labour spokespeople brushed aside criticisms that I was making. I was, if members will excuse their phrase, "a troublemaker". Angus Mackay, a very nice boy-

Photo of Margo MacDonald Margo MacDonald Independent

I apologise to Jack McConnell, but I do not have the time to take interventions. We will talk about it at the Audit Committee, I hope.

Angus Mackay went so far as to say that the medical staff at the royal infirmary were very pleased with the PFI plans. They are not. Here it is in their letter dated 31 May. They are anything but pleased; they are very concerned. They have lost all confidence in the matter being handled properly. Did it cross Angus's mind, when he spoke the words that he was given at the press conference, that there had to be a reason for the showpiece PFI being unable to attract and keep a chief executive or a director of nursing services? There is something wrong with the whole contract. I ask the minister to re-examine the matter.

I apologise, but I will return to the election campaign. It looked as though Sam won the heavyweight contest with Donald Dewar. Sam said that he could reopen the books and renegotiate the part of the contract that referred to the Unison members who will lose their pension rights, a matter which he mentioned today. Donald Dewar said that the contract could not be reopened. I take it, then, that Sam won that argument. I am therefore asking that we re-examine the contract, and that we certainly stop the second PFI contract until we are convinced that there is value for money and that the BMA was not right when it stated that the medical services and the quality of services will be reduced in the new hospital.

Photo of Andy Kerr Andy Kerr Labour 11:41, 24 June 1999

I thought that it was inappropriate for Adam Ingram to say that we are not celebrating 50 years of the NHS when the largest building programme in its history is under way. Some of that has been funded through the traditional channels and some under public-private partnerships. I find it strange that he spoke about the needs of the people, when in East Kilbride, where I was born and brought up, the new £67.5 million Hairmyres hospital is literally growing out of the ground. A partnership agreement has been signed by the management and staff, who are represented by Unison. That is a benchmark for participation and for trade union and employee involvement in such schemes.

In the hospitals which I knew, people had to get an ambulance to get to the X-ray department from another part of the hospital. The gynaecology patients needed a trolley service to get around different departments. That is the sort of hospital that we are trying to get rid of, and this is the real issue in today's debate: new hospitals would not be built through traditional finance channels.

On the Glasgow schools project-I mention this although Kenny Gibson is not in the chamber at the moment-were it not for the PPP input to schools there, it would take 20 years to get to where it will be in three years. That is the reality of funding. We are making hard choices, but governments have to make hard choices. On the campaign trail, I heard that the people of East Kilbride wanted a new hospital on their doorstep. That is what they are getting as part of a modern health service, not a wartime TB hospital, which the staff who work there do not want to work in either.

I distance us from the Conservatives, who talk about privatisation. They talked about compulsory competitive tendering, through which conditions and quality could not be taken into account-lowest price was the issue. The Conservatives acted according to that in local government, under compulsory competitive tendering. I have knowledge of that because I worked in the public sector. Lowest price was important, not quality. The contracts are written by the people involved in the health service. They can and do include issues of quality. During the tender evaluation, such issues are considered. That is the strength of the schemes of which we are now in control under the PPP scheme. I welcome the minister's mentioning of openness and pensions in this morning's announcement. Like everyone else, we have concerns about those working in the health service.

I am happy to participate in this debate and to support the amendment which has been lodged. Real people in the real world want these services and, at last, those real people are getting them.

Photo of Christine Grahame Christine Grahame Scottish National Party 11:44, 24 June 1999

It is difficult to bring anything fresh to this stage of a debate, so I am speaking on behalf of my left foot, which has had immediate contact with the Edinburgh royal infirmary. I have been privileged not only to assess disability access in this building, which is very poor, but to gather information at first hand about the need for a new royal infirmary.

I was wheeled into accident and emergency only a month ago with my throbbing foot raised in front of me. I was parked next to a youthful tae kwon do enthusiast-in parallel pose-while we waited an interminable time, as in a Monty Python sketch, to be taken for examination. Much, much later that night, I progressed-or so I thought-to a cubicle and was left, shrouded in a green curtain, in solitary confinement. Time passed slowly and I was wondering whether I had been forgotten about when a cheery male nurse did the necessary and went off to hunt for what he called "a decent crutch". He did not find one. While he fondled my foot in the line of duty, we had a deep discourse about the level of nursing pay. It was a useful discussion, and I thoroughly sympathise with nurses over their remuneration. I hope that we can do something about it.

Subsequent visits to the fracture unit have continued my health service education. Access to the fracture unit, for one who is hirpling around the city, offers a challenge of gladiatorial proportions. Transport can get no further than a portcullis entrance. My left foot and I, and the not-so-decent crutches, had a 30 yd trek to the main entrance. That was stage 1. After a prolonged and enforced break at reception-people should take their own entertainment and provisions as the 2 pm appointment should have read 3 pm; I took a stereo, a magazine and a banana-I progressed to stage 2. I was then shown a lengthy corridor where I was lead to believe that I would find, like Jabba the Hutt, the residence of the consultant. He appeared after a considerable length of time from the only door I was not watching. In the meantime, I had the privilege of reading my own medical notes, as many of us do.

Photo of Mary Scanlon Mary Scanlon Conservative

Would Christine Grahame mind relating her left foot experiences to the subject of the debate?

Photo of Christine Grahame Christine Grahame Scottish National Party

I will do. I am coming to that, if Mary Scanlon will oblige me.

I had not been in a hospital for 40 years and realised what the royal infirmary's difficulties are. I fully accept and am sympathetic to the bill. The difficulty is that the new infirmary should not be built at any cost to the Scottish public.

We have thoroughly examined the matter of PFI. It is a disgraceful way to finance public services and buildings, and I am astonished at some of the contributions from the likes of John McAllion. I will not requote the quote that has come back to haunt him, but will mention my Labour opponent in the Tweeddale, Ettrick and Lauderdale constituency, George McGregor. Speaking as a Unison representative, he said:

"The Edinburgh Royal Infirmary will cost the taxpayer 1.5 billion pounds to fund a hospital which in cost is 190 million pounds. For us, we say that PFI is about getting a mortgage with a loan shark."

Poor George. How that hung like an albatross round his neck during the debates in Tweeddale, Ettrick and Lauderdale. He did not support PFI, and I know that many on the Labour benches are very unhappy about it. When I sit in this chamber and hear Conservatives congratulating Labour congratulating the Liberal Democrats, I feel that I am in a surreal stage setting.

It is time that the matter was revisited. The SNP proposal is a very good one, the financial aspects of which-like Margaret Smith, I am not an economist-will be developed by Andrew Wilson. I commend the motion.

Photo of Murray Tosh Murray Tosh Conservative 11:48, 24 June 1999

It has been a remarkable debate in many respects. Here we are, almost at midday, and we have heard several times the refrain that Mr Andrew Wilson will address the motion for the first time when he speaks later. It is curious to sum up for a debate which has not begun; we have not heard anything constructive or meaningful about the SNP's proposals.

The nearest that we came to a real contribution was that of Mr Ingram. He took up the points of Mr Crawford and Mr Gibson: that SNP local authorities which took up PFI initiatives had to do so because it was "the only game in town", their arms were up their backs and there was no other choice.

I wonder what position the SNP believes Her Majesty's Government is in when it embarks on a variety of methods to fund capital investment. It is no surprise-Mr Ingram referred to this-that the framework for public sector borrowing and investment in our economy is essentially dictated by sound principles of macroeconomic management, which were most recently embodied in the Maastricht treaty and in the European Reconstruction and Stability Pact.

Mr Ingram made the point that, in the context of the 60 per cent and 3 per cent rules, there was scope to expand conventional public sector borrowing. There may very well be scope in the current climate, when we are very nearly at the peak of the economic cycle-but an economic cycle goes up and down. We were not in a position to meet the Maastricht treaty's requirements when it was signed; virtually no European economy was at that stage. It is a matter of good economic management.

Photo of Murray Tosh Murray Tosh Conservative

I would say to Mr McNulty, who made the point about under-investment in the public sector over 20 years, that public sector borrowing restraints were introduced to our economy in 1976 and since then we have had to live within sensible economic management rules, as every major industrial economy does. There is a limit to the amount of borrowing that is reasonable. I will allow Mr Sheridan to come in at a later point as there is something I have to say to him.

This Government, like the previous Government, faces the difficulty of the massive backlog in necessary investment in the public sector. We have heard a lot this morning about "public sector good, private sector bad." I find that very curious-it is the mirror image of the caricature that is thrown at Conservatives all the time, which is not our position. "Public sector good, private sector bad" seems to be the position of the SNP, however. The private sector has a far better track record than the public sector in building and maintaining properties.

What Tommy Sheridan said about some of the reasons for the poor qu ality of council housing in Scotland is true, but the essential problem is that councils have never indulged in life-cycle costings. They do not build up reserves to tackle necessary repair work at the end of the lifetime of a building. Housing associations build up reserves and their tenants know that, at the end of the lifetime of their buildings, they will be able to get the repair work that is needed. They are technically private sector, so the SNP does not like them.

Photo of Tommy Sheridan Tommy Sheridan SSP

I have two questions for Mr Tosh. He mentioned housing again. Does his party support the cancellation of the capital housing debt in cities like Glasgow, given that it cancelled the debts of Scottish Homes, British Steel, British Rail, Scottish Gas and others? Secondly, does his party support the retention of the public sector borrowing requirement, or would it support the introduction of the European-wide new system of general government financial deficits?

Photo of Murray Tosh Murray Tosh Conservative

That is the nearest we have come all day to a constructive suggestion. I would welcome a debate on central government general deficits, or whatever the jargon is-I can never remember quite how to style it. I would even welcome a debate on the idea of public sector trusts.

Photo of Murray Tosh Murray Tosh Conservative

The Government has allowed local authorities in Scotland the latitude to indulge in consultancies and to investigate a variety of proposals to increase investment in housing through a variety of delivery mechanisms. The SNP has not suggested a public sector trust in the context of housing. It has said no-absolutely no, ideologically no, totally no-to any variation from the existing pattern of local authority tenure. They say that in the full knowledge that it means no extra resources, no ability to fund the massive housing programme that is required by that position, and they take the same position on the entire gamut of public sector policy.

Photo of Murray Tosh Murray Tosh Conservative

The SNP this morning has said no to increased investment in education, no to increased investment in housing, no to increased investment in health. It has not brought forward constructive proposals.

Photo of Murray Tosh Murray Tosh Conservative

SNP members give the impression that they are not actually interested in improvement and that they relish the problems that we have and glory in preaching about what they would do about them. All my life I have heard the SNP promising to spend money. If only they were in power, money would be spent on everything. They have bottomless pits to their pockets. Everybody will be catered for in an independent Scotland, despite its huge structural deficit, despite the economic problems that it would have, despite the fact that the SNP would have to live within the same economic rules as everybody else and would have the same difficulties in managing investment in public sector borrowing as everybody else.

We have heard the SNP moan and moan about the absence of new politics in this Parliament. This morning, the absence of new politics is concentrated in their corner of the chamber. We have heard nothing that was constructive or that takes us forward. All we have heard is moaning and whingeing. There is no statesmanship in the motion and no strategy to engage the Parliament in a constructive debate about the variety of mechanisms that might be developed.

Let us have a proper debate about how we can take Scotland forward. Let us welcome some of the changes that the Government has announced this morning and consider how we can continue to develop what has been achieved so far. Let us look forward to a Scotland that will be able to satisfy the demands and the needs that exist in our society and dismiss the SNP's partisan, ranting old politics and old-style electioneering.

Photo of Andrew Wilson Andrew Wilson Scottish National Party 11:55, 24 June 1999

I thank Mr Tosh for a vigorous contribution to the debate. As we stand here in the General Assembly building of the Church of Scotland the ghost of Mrs Thatcher's sermon on the Mound seems to live on. The difference is that, if she were here today, she would receive not the condemnation that she had at the time, but support from the Liberal Democrat, Labour and Conservative benches. Mrs Thatcher's approach to funding public services has been embraced by the people's party, by the still-alive-but-not-quite Conservative party and by the ever-spinning and without-principle Liberal Democrats.

The reality is that Labour's bluster and bluff-and Mr Galbraith's plain rudeness-failed to disguise the facts of the matter. Labour has changed the position that it held in opposition, when it utterly opposed the PFI scheme. Harriet Harman and Alistair Darling are on the record as having said as much. The Liberal Democrats have made a volte-face, but that is no surprise from a party that has lost the respect of the entire country-I would except Ms Smith from that, as she made a good speech.

PFI is expensive and unnecessary. I welcome what Dr Simpson said, as it shows that we now have agreement across the political spectrum. He said-I think his words will come back to haunt him in years to come-that "the party that introduced the first privatisation of the health service in the United Kingdom was the Labour party."

I agree with Andy Kerr that this is about service quality and delivery. The Government makes a distinction between short-term gain and the long-term sustainability of the public sector. Prudence and sustainability must go hand in hand with delivering public services. Short-termism is the problem with PFI. PFI means signing up to a much more expensive lease deal for the delivery of public services.

It is all very well to say that we will deliver hospitals and schools today-of course everyone wants that-but we must be prudent and honest about where the money is coming from. The Edinburgh royal infirmary, as Margo MacDonald said so well, will be seven times more expensive than if it was funded through borrowing under conventional mechanisms-it will cost the public purse seven times the actual cost of the project. Will Mr Galbraith answer that point in his summing up, rather than just shouting about it during the debate?

The Government can issue a Treasury gilt bond at 4.5 per cent. The average return on PFI is 10 per cent. With a cost-of-capital difference of 5.5 per cent, how can the circle be squared? Will it be by hitting pay and conditions for workers?

Ms Scanlon, Mr McNulty and Mr Chisholm seemed to suggest that there was no alternative to private finance. Adam Ingram-if folk were listening-made the most significant contribution to the debate today and to the PFI debate beyond this chamber. Mr Tosh mentioned Maastricht, but within the Maastricht guidelines, which everyone accepts as prudent, there is £22 billion to spare for public projects in the UK.

Photo of Des McNulty Des McNulty Labour

Does Mr Wilson accept that I and a number of other speakers suggested several different options for financing different kinds of public investment? The SNP is the only party that is not prepared to put forward a decent option. We are still waiting to hear what the SNP has to offer.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

I was pointing out that there is an option within the existing public sector arrangements to issue bonds to the tune of £22 billion and to finance that within the Maastricht deficit limits. That is what is available to the public sector just now. The point that we have been making is that this Parliament does not have that option because, in the Scotland Act 1998, the Labour Government reserved that function to Westminster. That is regrettable but it is the case. "Pathfinders to the Parliament" also recognises it as regrettable.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

If Mr Tosh can remain in his seat, perhaps he can come in later.

In a 16-page document that has been the most substantial contribution to the privatisation debate so far-Mr Tosh should have taken the time to read it-we outlined our idea for public service trusts. That idea is a significant and positive suggestion about what can be done within the confines of devolution. We will criticise the limits of this devolved Parliament and come up with positive suggestions on how we can make public services work; I hope that we can move on and make the case.

I also welcome Mr Chisholm's backing for our case for openness and accountability in public service contracts. It is critical that we know exactly what is being done in the public's name. Alistair Darling supported that position before the election. On 11 January 1997, he said in the Financial Times:

"Legitimate use of commercial confidentiality is one thing, but using it to hide the truth about the extent of the taxpayer's commitment from the public is inexcusable."

In a very welcome announcement today, Mr McConnell said that announcements will be made by project area rather than by specific projects. Sectoral spending on specific PFI deals is a step forward. However, that is only because the scale of PFI funding is so great just now that commercial confidentiality can be hidden within those bounds. If we are to have openness and accountability, it must be on a project-by-project basis.

I refer members to what Geoffrey Robinson, the former Paymaster General, said on "Channel 4 News" on Monday night. Of his time at the Treasury, he said:

"I wanted the idea of transparency translated into reality, if there was a question about what was commercially sensitive or not, those that were involved should respond to the spirit of what was required and should reveal more rather than less."

Through the Finance Committee, we want to be provided with the detail of the deals involving every public-private partnership project. There should be no hiding behind commercial confidentiality. No one other than the Government knows, for instance, to whom the £20 million funding for the Holyrood project is going. Let us open up the matter and put it before the Finance Committee. I hope that Mr Galbraith will agree to that when he sums up-all members would welcome it.

I now come to public service trusts. If that puts several folk on the edge of their seats, they should really have paid attention to the documents that we issued during the campaign that was launched over the weekend. On Sunday, Mr Galbraith issued what was-with the greatest respect-a very embarrassing press release condemning the campaign. Mr Galbraith did not know what he was talking about. We know that the Treasury has examined the public service trust model in detail and we know for a fact that our idea is gaining some currency. Scottish Homes is considering a similar model, as did "Pathfinders to the Parliament". We can cite a whole range of examples throughout Europe of the public service trust model in action.

Photo of Malcolm Chisholm Malcolm Chisholm Labour

Is not "Pathfinders to the Parliament" more honest in admitting that what is being proposed would count as public expenditure? The document talks about borrowing that is supported by an income stream, as is the case for the transport charges that are mentioned, which is quite unlike what happens for either the health or education services.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

Mr Chisholm's first point is wrong, but his second is correct. We believe that this innovative financial arrangement should not count as part of the public sector borrowing requirement. That is reasonably straightforward. Mr Chisholm is right, however, to say that the document talks about borrowing that is secured against an income stream-as Fiona Hyslop's idea for a communities and homes trust is secured against a rental income stream-or against a guaranteed income stream from the public sector. Either way, the model works and is bang on. That is something that Malcolm Chisholm should support, given the point that he has just made.

If we were to stand before the Parliament and propose healthy eating and regular exercise, Labour members would be on their feet condemning it as a left-wing plot and entirely unworkable. No matter what good ideas come before the Labour party, if it has not thought of them, it will condemn them-unless the Tories thought of them. The SNP cannot suggest anything that Labour will endorse, because Labour's is the politics not of ideas but of cynical and nasty electioneering. The way in which Labour members conducted their entire election campaign was appalling, because they offered nothing. Their only idea was to tell the electorate to vote for them because they were not the SNP. Let us hear some positive ideas that have not come from the SNP-then we might support the Labour party.

As I said, the model is perfectly workable and the only criticism of substance that has been made against it was from the private sector, which did not like the idea of securing the jobs and conditions of public sector workers. Why does Labour, the people's party, disagree with our idea? We are not going to give ground; we are not going to privatise the workers at the expense of their working conditions, because we have too much respect for them. Susan Deacon may shake her head, but she must agree with the idea, as I know that she opposed PFI in the past. What changed her mind, other than a seat at the cabinet table? She and people like her should examine where their politics is going if they are willing to give up every principle that they once held to pursue PFI.

I hope that members will forgive me for that dig at Susan Deacon. I could not resist it, but I want now to deal with some more positive contributions. Mr McConnell's point must be welcomed, but let us go further. It makes some sense to include land in any deals. Mr Macavity-or McAveety-probably opposed that when he served on Glasgow City Council and considered the housing deal. I know that he was very precious about some of the council's land assets. Maybe the proposal will send a shock wave across there. If it makes things work and keeps rents down, it will be better than the status quo, and I would have to support it.

As Margo Macdonald pointed out, the reason that this issue has been forced is the scandal of the transfer of land during the Edinburgh royal infirmary deal. Mr Galbraith may shake his head, but land that was transferred during that deal was subsequently sold off for private housing development at six times the price that was paid for it. Will Mr Galbraith bring the figures before the Parliament? He should stand up and tell us what the reality of the situation is. That is the information that I have in front of me, but which he hides behind an argument of commercial confidentiality. The detail will be examined under the Transfer of Undertakings (Protection of Employment) Regulations 1981, which is a step forward.

In summation, I say that PFI is a profiteering scam. It serves politicians well, because they are able to announce the building of new hospitals and schools and can take the kudos. The long-term pain is over a number of years and Labour members will not be here when that pain is brought down on the public sector and the taxpayers.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

Frank, I will take an intervention. When Tony Blair came into government, his hair went greyer. Yours seems to have gone darker.

Photo of Frank McAveety Frank McAveety Labour

I thank Mr Wilson, and remind him that I have maintained my consistency for intellectual superiority. After his performance last night on the football field, I suggest that a few more training sessions would be welcome.

The principle that should guide any debate- either in local authorities or in this Parliament-is, as the Minister for Finance said, what is in the public interest. Even under conventional rules, the model that we figured for Glasgow City Council's education bid would deliver in three years the kind of schools that people require. Does Mr Wilson accept that, if we waited for the SNP's proposals, a high-school student who is leaving a Glasgow school at the moment could have a child who would also be leaving school by the time the proposals had begun to be implemented, with the school still not improved? We should address the fundamental issue of the moment, which is to deliver in the present a quality education service for the future.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

I thank Mr McAveety for that significant contribution. I remind him that I scored a number of goals last night.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

Mr McAveety only says that because those goals were scored against his team. I agree with him about this: we need improved schools within three years, and there are three ways of achieving that. The first is to operate within a PFI deal that exacts the cost over 25 years and hits the taxpayer over the longer term. The second is to be honest and to tell the electorate that we will finance the work in a way that is prudent over the long term and will not defer the costs to future generations. We would ask them to pay for it through traditional and progressive taxation. We offered that solution, and the Liberals suggested they might support it, but now they have performed a volte-face. The third option is the public service trust, which sits on the PFI model but does the job cheaper.

Those are the options. The Parliament must be either honest or dishonest. We bring honesty to this debate, while Labour says, "We will deliver jam today, take your votes tomorrow and disappear over the horizon once the costs come home to bear on you."

PFI gives too much influence to the private sector. In case members do not believe me, I will quote Mr Paris Moayedi, the chief executive of Jarvis. The First Minister did not appear to have heard of Jarvis when it was first mentioned in this debate, although it is the most significant PFI funder of schools in the UK. The Channel 4 interviewer asked Mr Moayedi whether he was hoping to run a couple of hundred schools in two or three years' time, to which Mr Moayedi said yes. When the interviewer said that that would make Jarvis a very powerful player in Britain's education system, Mr Moayedi replied, "We hope so." That is what is going on.

That is where the PFI deal is taking us, and there are members from all parties who agree with that. I appeal to them to look to their consciences, not to their briefs or whips. They should examine the reality of politics today. We are being sold a dummy pass by people here who have performed a volte-face on their principles to get into the seats that they now hold. I ask non-Executive members to question what they are getting out of it apart from lack of principle.

It will be easy to expose this matter over the next few years. I say to Mr McNulty that we have offered positive solutions, which should be taken seriously rather than dismissed out of hand. This is a serious debate about the long-term use of public funds to finance public services. We have brought some positive solutions to the debate. The Liberal Democrat business manager, Iain Smith, is smiling, but that party has disgraced itself in this Parliament and has nothing to offer the debate. If Mr Smith wants to intervene, I would be delighted to give way.

Photo of Iain Smith Iain Smith Liberal Democrat

How does Andrew Wilson reconcile his criticism of our position on PFI with the wording in our manifesto? Our manifesto says:

"We will also seek the appropriate alteration to the current unnecessary restrictive Treasury rules regarding investment . . . We will also separate out the maintenance and service contracts and subject them to 'Best Value' criteria."

The proposal that is part of the partnership agreement also seeks to change the Treasury rules and to ensure best value. The two statements are virtually identical. I cannot see how we have sold out our principles by bringing forward a new approach to PFI in the partnership agreement.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

I congratulate the Deputy Minister for Parliament on his exacting victory in the negotiations for the coalition. Clearly, it was a wonderful victory, but if he will continue to pay attention to the debate I will remind him of a quotation from the Liberal Democrat manifesto. It said:

"We will seek to invest in capital projects for better hospitals, schools, and house building programmes . . . to replace the expensive and inefficient Private Finance Initiative agreements."

If such agreements were expensive and inefficient before the election, why are they no longer expensive and inefficient?

Photo of Andrew Wilson Andrew Wilson Scottish National Party

I do not know why Mr Smith is jumping up again; I am not taking a second intervention as I have to finish my speech.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

The choice for us in this Parliament is limited. We have the option of exacting private finance only if we are to lever in some capital, because there are no borrowing powers. We have no options in this Parliament because the powers that have been conferred on us are limited.

If we are to go ahead with private finance, I suggest that we adopt the public service trust model and use the pathfinder and Scottish Homes ideas. Members should accept the reality that the SNP is ahead of the game and is in the European main stream of what is going on.

Keith Raffan is laughing, but he must admit that he does not know what he is talking about. The reality is that there is a new right alliance from the Liberal Democrats right round the- [Interruption.] The level of abuse from Mr Raffan throughout the debate has been disgusting. My mum and dad respect the guy; wait till I tell them what is going on.

There is a new right alliance throughout this chamber, and the reality of what is going on in public services today is that those guys have won. As I said at the start of my speech, the ghost of Mrs Thatcher-even though she is not dead; it is a living ghost-is living on in this chamber, and members of all the other parties are complicit.

Photo of Sam Galbraith Sam Galbraith Labour 12:11, 24 June 1999

One of the things that makes me run for my sick bag is politicians who adopt a position of moral superiority, particularly when it is tinged with patronising arrogance. I hope that we will see no more examples of that in the future.

I got my usual brief for this debate and the draft speech starts off with the words:

"This has been a good debate."

That is usually a euphemism for saying that it has not been very good, but rather variable and patchy. The thing that has characterised this debate-and it surprises me-is the extent to which so much has been said on the basis of ignorance of the subject and lack of information.

As so much has been made of this issue, I thought that we would at least have stopped some of the rhetoric and got to the bottom of the matter. We should at least have read some of the documents and got a true idea about what is going on.

Photo of Sam Galbraith Sam Galbraith Labour

I have only just started. If Mr Crawford will give me a bit more time, I will get round to him in a minute.

I hear charges that are based on sheer ignorance. All the points have been dealt with, but some people will not take true answers and just go on and on. It is normal and courteous in debates to deal with the points that have been raised, and I will deal with some of them now.

I must tell Margo MacDonald that the great bomb that she dropped with the devastating revelations in her leaked letter was really a bit of a damp squib. I am sure that she would agree that there is not really much in it.

Photo of Sam Galbraith Sam Galbraith Labour

Yes, that is what she said, but she was a bit selective in reading from it. She missed out the passage that said:

"The NRIE is a challenging project which will be a success".

She might have included that quotation.

Bruce Crawford asked about level playing fields. Level playing field support, as he knows, is top-sliced off aggregate external finance. However, there is an agreement with the Convention of Scottish Local Authorities whereby it will no longer be top-sliced, but will be put into AEF; it will be up to local authorities to make their own choices about pursuing such projects.

Photo of Sam Galbraith Sam Galbraith Labour

But of course I will give way. I would be delighted.

Photo of Margo MacDonald Margo MacDonald Independent

I think that we are agreed on one point. This is too serious a matter to brandish about without a route out of what is still a huge dilemma. Let us not bother about how huge it is; it is a big dilemma. I did not go through the list of six points in the letter because there was not enough time, but Mr Galbraith will agree that the whole contract needs further examination.

During the election campaign, Mr Galbraith was big enough to say that he would look again at the question of pensions, and it looks as though he succeeded in that. Can we have some sort of retrospective look at this contract, particularly at the land deals? We know that there is another land deal coming up at Lauriston.

Photo of Sam Galbraith Sam Galbraith Labour

Andrew Wilson also mentioned land deals. He should read the letter to his leader and he should look at the Westminster parliamentary answer to John Swinney's question. Let us get things clear. There is no rip-off on the land; the return to the developer was perhaps slightly less than can usually be expected at about 4 to 5 per cent based on a total value-once all the houses were built-of £93 million. Taking off the cost of building all the houses and the infrastructure, there is a return of 3 to 4 per cent. I understand that Bruce Crawford is a world-leading economist, so he can work out what 3 to 4 per cent of £93 million is. If he cannot, he can come back to me and I will help him.

Photo of Bruce Crawford Bruce Crawford Scottish National Party

I am grateful for the information on level playing field support that was provided to members today. Obviously, level playing field support was introduced as a mechanism to equalise against the capital projects that were formerly being undertaken by local authorities. Is the minister confirming that that level playing field support, which was brought in for that purpose, no longer has any headroom and that all the costs associated with future PFI projects undertaken by local authorities will have to be borne by local taxpayers?

Photo of Sam Galbraith Sam Galbraith Labour

As I explained, that level playing field was top-sliced off AEF. It will no longer be top-sliced and will go directly to the local authority, which can make its own choices.

I realise that I do not have too much time, so I shall move on to say something about the history of public-private partnerships. They were first mooted by Joel Barnett many years ago and partly adopted by the Ryrie rules; the first person to introduce them was, in fact, John Prescott. At that stage, the Tories opposed them because they said that they were not privatisation. The reality is that public-private partnerships are not about privatisation, but about using private sector involvement to deliver services. They are not about taking over services, but about how to get best value for money, and we must remember that all these projects go ahead only if they are value for money.

I have heard a lot of nonsense about how much more such schemes cost in terms of public borrowing. Over the lifetime of the contract, they are value for money. There is no great legacy left at the end of them at all; they are actually cheaper in the long run.

The SNP position is based in dogma. SNP members say that they want to bare their breasts, pay more and waste more of the taxpayer's money, just because of an ideological position. They do not want to make savings; they want public services to waste money rather than to deliver services. That position should not be acceptable. One of the theories behind such thinking is, I suppose, that they want to own those assets; that seems to be some kind of great totem for them. We can own those assets. I heard Mrs Ullrich saying that there is no option to own the royal infirmary. Has she read the business plan? It is written into the full business case, for goodness sake.

There are three options. We could walk away from the scheme; that is sometimes a good option, as it gives us the flexibility to move on. We could continue with another contract to maintain the building; many people think that that option is the best one. Alternatively, we could take over the facilities. That is written into the contract. If we are going to have a debate on this, please let us base it on fact and not on any more rubbish. Please let us read some of the documents.

Photo of Andrew Wilson Andrew Wilson Scottish National Party

I am grateful to Mr Galbraith for giving way. Will the buy-back arrangements always be in the public domain for every PFI contract?

Photo of Sam Galbraith Sam Galbraith Labour

Absolutely. I have heard some rubbish about secrecy and transparency. One of the things that the Labour party has done to alter PFI significantly since the Tories dealt with it is to put every outline business case and full business case in the public domain. Was Andrew Wilson aware of that? It seems odd that he should complain about secrecy when one of the first things that we did was to put those things in the public domain.

Photo of Sam Galbraith Sam Galbraith Labour

I will not give way again. Much as I love Margo, she ought to sit down.

All those documents are in the public domain. The only trouble is that nobody in the SNP has actually read them; it would be a good idea if someone did.

People have mentioned the terms and conditions for staff. One of the other changes that we made was to put in a condition whereby all public-private partnerships must in future involve the unions in discussions about the contractors that will be involved and the terms and conditions for staff in the event of a transfer of services. At Hairmyres, we have set up a partnership agreement, with the unions, that guarantees staff their pensions; the position is on-going at the royal infirmary.

That is the way in which we have changed things. PFI is about getting private sector money in so that we can deliver public services. Either we can have our hospitals today, or we can almost never have them at all.

Photo of Sam Galbraith Sam Galbraith Labour

I am sorry, Tommy, I am coming to the end of my speech.

The royal infirmary has been waiting for 25 years for its new hospital. I worked there, and it was a disgrace then. Now it has its new one. Glasgow can have its schools refurbished and highly equipped. That can be done in three years, or we can wait 20 years.

Photo of Sam Galbraith Sam Galbraith Labour

A member said earlier that this issue would be raised on every hustings. I hope that it will. We will say, "Look at this hospital. The SNP did not want you to have it. Look at this school. If it had been down to the SNP you would not have it." We are not apologising in any way for public-private partnerships. We are proud of them. We are proud that we are delivering schools and hospitals and other facilities for our people. We are the people's party; we are delivering the people's priorities, and we are proud of that. [Applause.]

Photo of Lord David Steel Lord David Steel Presiding Officer, Scottish Parliament

That concludes the debate. The decision on the amendment and on the motion will be taken at 5 pm.