It will come as no surprise to most people that a whiff of controversy still surrounds the Private Finance Initiative (PFI) and Public Private Partnerships (PPP). PFIs were introduced by the Conservative Government led by John Major, and were touted as a way of funding public sector capital projects, without the money having to appear as public expenditure. The private sector would take care of the funding for new schools and hospitals, with councils and health boards repaying the money as revenue expenditure over 30 years. We were told it was a ‘win-win’ deal for the public.
In opposition, the Labour Party strongly criticised and opposed PFI, but when Tony Blair and Gordon Brown entered office in 1997, the funding scheme was warmly embraced and given a new name. Labour rolled-out Public Private Partnerships with the evangelical zeal of the truly converted. Council’s and health boards across Britain were told there was only one game in town – PPP – but that funding was available, so they should fill their boots. New schools and hospitals began to spring up in virtually every part of Britain, with Labour Party MPs, MSPs and councillors all claiming to be delivering new facilities for their constituents. On the face of it, Labour was performing an economic miracle, but, in reality, it was little more than an economic con.
Recently, in a documentary by MacAulay Gibson Productions, I reported on what happened in one PPP project, where North Ayrshire Council entered into a contract to build and maintain four new schools. Again, on the face of it, all seemed fine. The Council had two bids, providing the ‘genuine competition’ required by European Union Procurement Regulations, and the whole thing was scrutinised by civil servants in the then Scottish Executive’s Financial Partnerships Unit, which, in turn, was overseen by Partnerships UK. The latter body was staffed by civil servants seconded from the UK Treasury and by former employees of large corporations involved in delivering construction contracts.
However, as revealed in the documentary, the reality of the North Ayrshire procurement process was very different. Investigations showed one of the bids received by North Ayrshire Council came from a company formed after the local authority had invited tenders for its contract to build four schools. Comprehensive Estate Services Limited (CES), as a newly-formed company, had no accounts and had issued share capital valued at just £2.00. In addition, CES had no office. The headquarters it listed in bid documents was actually the office of a chartered accountant in the Fife village of Strathmiglo. The accountant said he let CES use his office as a postal address.
The bid documents submitted by Comprehensive Estate Services Limited, copies of which were secured under Freedom of Information legislation, indicated that CES was a subsidiary of a major Singapore-based construction company called CPG Corporation. Documents stated that CPG Corporation was the major shareholder in CES, at 56%. However, when the Singapore corporation was contacted, President and Chief Executive, Mr Pang Toh Kang, replied: ‘Comprehensive Estate Services is not a subsidiary of CPG Corporation’, adding, ‘there is no cross-shareholding between CES and CPG’.
North Ayrshire Council was told about this lie in the bid submission of Comprehensive Estate Services Limited. Indeed, the local authority was made aware of further blatant lies and misrepresentations in the paperwork submitted by the Fife company. The Council, though, took no action and continued to publicly state that the bid from CES was credible and viable, and provided the required ‘genuine competition’.
The reality was that North Ayrshire Council only ever had one credible and viable bid for its school-building project, valued in 2006 at £380m. There was no ‘genuine competition’. In fact, there was no competition whatsoever. By allowing the CES bid to remain until the very end of its procurement process, North Ayrshire Council gave the pretence of competition. The matter was raised with the Crown Office Procurator Fiscal Service, which instructed the then Strathclyde Police to carry out an investigation. Less than two weeks after the police investigation commenced – and without the complainers being interviewed – the enquiry was concluded. The Crown Office Procurator Fiscal Service then stated the matter was closed as it had been found there was no evidence of criminality.
In the MacAulay Gibson documentary, two former senior detectives reviewed the evidence originally presented to the police and Procurator Fiscal. In the opinion of one ex-detective, the evidence showed ‘criminality from start to finish’. The other former officer stated a common law crime of Forgery and Uttering should have been pursued. All of this information relates to a PPP contract now costing North Ayrshire Council over £1m every month.
Full details of the investigation into the North Ayrshire Schools PPP Project are revealed in ‘The Only Game in Town’ (see https://www.youtube.com/watch?v=paLSPNPfQXM&t=3s).
Campbell Martin is a journalist and former SNP MSP.