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By Bob Duncan
Financial support to build an additional 12 new schools has been found through savings across public infrastructure schemes, according to the body set up to deliver value for public money in Scotland.
Cabinet Secretary for Infrastructure and Capital Investment Alex Neil today welcomed news that the Scottish Futures Trust (SFT) saved the Scottish public sector £131 million last year, £2 million more than the previous year.
The SFT, tasked with improving value for money from our public-sector infrastructure, today published its annual benefits statement for 2011/12.
The independently verified report illustrates that SFT has met its financial target to release savings of between £100m and £150m per annum for the third year in a row.
The trust, which was set up by the SNP government to find ways to avoid the excess profits made from Private Financing Initiative (PFI) model for public sector projects, believes its efficiency drive has cut costs on the school building budget so much that it can afford to construct another 12 schools.
According to the trust, it does this through what it calls the non-profit distributing model (NPD) – set up as a way of using private financing to fund large infrastructure projects at a lower cost than the widely discredited PFI model brought in by the last Labour Government.
An SFT report said: "Such has been the success of SFT's focus on high quality sustainable design at a competitive price that within Scotland's Schools for the Future programme, for example, enough money has been saved to build an additional 12 schools, increasing the total number from 55 to 67".
Many of the £131m savings across its activities have come from not having to use more expensive consultants. And with more funds added to the trust's £4m operational budget, it is being given the new task of saving £500m over five years through better management of buildings and other assets owned by the government in Scotland.
SFT Chairman Sir Angus Grossart said the trust had "demonstrated significant progress in times of economic challenge".
He added: "Central to SFT's success in delivering £131m of savings and benefits has been the strong strategic alliances it has established with local authorities, health boards and other public bodies across Scotland to collaboratively deliver value-for-money on public sector construction projects."
The SFT, using calculations validated by accountancy experts at Grant Thornton and the London School of Economics, said that house-building is currently keeping 700 construction workers in jobs. With a programme to build 1,000 homes, 600 are being built at present, on 12 sites.
Trust chief executive Barry White said: "Thanks to the collaborative working arrangements embraced by Scottish public-sector bodies, together we have secured £131 million of net benefits and savings to the taxpayer.
"These figures clearly illustrate the robust challenge and commercial expertise SFT brings to public-sector infrastructure investment across Scotland. It is our responsibility to ensure the public pound stretches further in these challenging times.
"Nowhere is this better illustrated than through the work SFT is delivering by managing the £1.25 billion schools budget so that an extra dozen schools can be built within the existing budget."
The Scottish government said the independently-verified report illustrated that SFT had met its financial target to release savings of between £100m and £150m a year for the third year in a row.
Alex Neil said: "The Scottish Government is doing all it can to maximise investment into infrastructure projects across Scotland.
"The savings SFT achieved last year, in collaboration with a wide range of public sector bodies, allow us to deliver more – more houses and schools, more health and community projects. Each extra £100m we invest supports 1400 jobs in the Scottish economy
"But while we are doing what we can, there is no question that swingeing cuts imposed on us by Westminster are impeding our efforts to support infrastructure investment and jobs.
"That is why the SFT’s work and the savings they are delivering across the public sector is so important. Going forward, I know the SFT will continue to push forward with plans to develop new, alternative and innovative financing models for infrastructure across Scotland.
"This will result in a good deal for taxpayers. And more high quality infrastructure like schools and health centres across Scotland that will benefit generations to come.''
The news contrasts with growing concern south of the border over the damage Labour-negotiated PFI contracts are doing to the English NHS.
Reports this week demonstrated the scale of difficulties facing another NHS Hospital Trust in England and the failings of PFI and the privatisation agenda south of the border.
Mid Yorkshire Hospitals Trust is losing £100,000 a day, with services set to be substantially cut as a result. Earlier this year it was discovered that the PFI hospital in Wakefield which is part of this trust was turning away ambulances because of a lack of capacity.
The Trust has to save £24m by April 2013 but will still end the year with a £26m deficit. The trust said it would not be in a financial position to gain foundation status, required by the government by 2014, in the "foreseeable future".
Two options are being considered for its three hospitals, Dewsbury, Pinderfields and Pontefract. One option involves Dewsbury losing its A&E unit. Both options would see its maternity unit downgraded.
Pinderfields is a brand new flagship PFI hospital, but it has regularly turned away emergency ambulances because it is full. The hospital was built smaller than expected in the hope that more people could be treated in the community to reduce costs – but according to the paramedics, that just isn't happening.
The hospital was built under a Private Finance Initiative (PFI) agreement, costing an estimated £330m, which Adrian O'Malley from the mid-Yorkshire Unison branch argues is leaving the trust with crippling debt.
"We wrote to MPs, various ministers both Labour and conservative and there's nobody who can say they weren't aware of this," he said, "and on the cost of the hospital, we're having to pay £40m to the PFI company putting even more pressure on patients and staff in the hospital."
Stephen Eames, the trust's interim chief executive, said: "The challenges faced by the trust have been a matter of public concern for many years."
These developments follow the recent announcement that South London Healthcare was in danger of being dissolved, despite having received £150 million in bailouts over the last three years.
Commenting, SNP MSP Sandra White who sits on the Holyrood Health and Sport Committee said:
"This latest private health crisis for the NHS in England shows just how badly PFI has damaged the health service south of the border. Trusts are buckling under staggering levels of debts and their problems are only being exacerbated by the privatisation agenda being pursued there.
"These developments clearly show that decisions are better made for Scotland by those Scotland has full responsibility for electing instead of a Tory-led Westminster government which Scotland rejected.
"Scotland’s track record of free personal care, free prescriptions, free eye tests and record NHS dentist registrations stand in stark contrast to what is happening south of the border. That is what the independence the NHS in Scotland already enjoys has allowed us to achieve.
"Although we are insulated from the Tories’ determination to dismantle the NHS one piece at a time, the cuts they are making are in danger of having a knock-on effect on Scotland’s budget. Only the powers of an independent Scotland can fully guarantee the future of Scotland’s NHS."