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Labour condemns plans to replace PFI

The Scottish Government's plans to ditch PFI are 'dead in the water', Labour claimed today.

It comes after question marks were raised by finance and union chiefs over its proposed replacement - the Scottish Futures Trust.

It has been claimed that aspects of the SNP administration's new initiative would be more costly than PFI in response to a consultation.

The issue was a key battleground in last year's election.

The Nationalists opposed the use of the private sector - through Private Finance Initiative or Public Private Partnership schemes - to build schools, hospitals, roads and other public projects.

The SFT is intended to be a non-profit body which would raise funds in private markets.

But the Chartered Institute of Public Finance and Accountancy has questioned the cost benefits of the new scheme.

In a consultation response it states: "On the narrow aspect of 'cost of borrowing', our view is that the SFT will cost more.

"We fail to see how, as claimed in paragraph 2.1 of the consultation document, that the SFT will provide opportunities for securing cheaper funding costs."

The body also raises a series of questions over the lack of detail in the policy.

Many of the consultation responses say more detail is needed to assess the SFT's viability.

Local Government body Cosla claims a key plank of the proposals - to issue municipal bonds - is outside the Scottish Government's power under the Scotland Act.

It calls for the plans to be put on hold until this is resolved.

A spokesman for finance secretary John Swinney said today that PFI has wasted "enormous sums" of public money by forcing councils to act alone, increasing fees, reducing bargaining power, and placing greater burdens on council taxpayers.