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SESA questions Scots alternatives to PFI

Broad Scottish Government (SG) proposals for an alternative to private finance initiatives (PFIs) have caused concerns for a leading industry body.

In a consultation which ran from December 2007 to March 2008, the SG suggested that a new infrastructure investment vehicle called Scottish Futures Trust (SFT) would provide a better deal for taxpayers than PFIs.

In the document the SG said it didnt support standard PFIs because they were expensive and the returns for [uncapped] private investors are excessive.

However, SESA, the Scottish arm of the Environmental Services Association (ESA) said that waste management operators would find it difficult to provide residual waste treatment infrastructure under the scheme. It also said that it was common practice for waste PFI contracts to use revenue sharing between public and private sectors, where a private partner delivers excess performance.

Another criticism from SESA was that there was a lack of evidence that SFT proposals had been informed by economic reality. It also said there was confusion about whether the scheme is lawful in the context of the SGs borrowing powers under the Scotland Act. A SESA spokesman explained: We are not sure if this would be allowed under devolution treasury rules. Its not clear if the Scottish Executive has the power to do this.

Another concern for the waste industry is that any alternative to PFI would take some time to set up. A new scheme would slow down infrastructure building even further. So, the time scale to make investments would be affected and this could impact on Scotlands ability to meet landfill targets.

This proposal has created uncertainty in the industry about what future funding will arise. PFI, for all its foibles, is a proven model, while SFT is untried. At this early stage there is no detail because its such a broad idea. But theres a whole series of questions that need to be answered on how it would operate and how much funding it would be able to lever in.




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