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Thursday, June 24, 1999 Published at 12:46 GMT 13:46 UK

UK Politics

McConnell announces reform of PFI

Oppositon parties have attacked the Private Finance Initiative

The Scottish Administration has promised reform of the controversial private financing of public sector projects in Scotland.

Finance Minister Jack McConnell told MSPs new measures would be introduced to protect public sector workers' pension rights and prevent revenue from surplus land being lost by the government

BBC Scotland Political Correspondent David Porter on the PFI debate
He also said the government will now make it possible to buy back buildings when PFI contracts expire and return them to public control.

In a debate initiated by the Scottish National Party, ministers were accused of allowing privatisation of school, hospital and transport projects "by the backdoor".

[ image: McConnell: New safeguards announced]
McConnell: New safeguards announced
But Mr Connell said the Scottish Administration is committed to its Public Private Partnership and it is successfully delivering new services.

PFI has been criticised by some leading trades unionists who are concerned public service workers' pension rights could by affected by agreements with the private sector.

There have also been concerns that surplus land on PFI sites is being lost to the public purse.

Mr McConnell said: "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 wish to see how we can make them better and how we can learn from experience.

Policy changes

"As a first step I have announced important new policy changes.

"A firm public commitment to a best value approach to asset sales, new pension rights for workers, new options for public ownership of the new facilities and more information for parliament and interested citizens."

But the Nicola Sturgeon, of the SNP, accused Labour of supporting a policy that is wrong in principle and practice.

The party's spokeswoman on children and education matter said: "It is privatisation of public services. Privatisation of the education system, the National Health Service and transport services.

Public ownership

"The assets created by PFI will never return to public ownership. PFI contracts are frequently referred to mortgages but in the real world when you pay off your mortgage you own your house, not so in the case of private finance."

Scottish Labour has faced a series of difficulties over the Private Finance Initiative, which came to a head during elections to the Scottish Parliament.

Leading Unison union official Mark Irvine resigned from the party, accusing it of abandoning its principles on PFI and party treasurer Bob Thomson urged the party to ditch its support for the policy.

Tax varying

The Scottish Executive also confirmed it is planning to shelve costly work needed to put the parliament's tax varying powers into operation.

It said it would stop the upgrading of Inland Revenue systems because ministers will not use the tax powers in the first term of the parliament.

The move will save up to £20m and the money will be used to help meet extra costs incurred in building a permanent home for the parliament at Holyrood.

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