Monday, 3 October 2016

Scottish government forced to cut £392m from public spending plans under EU rules

The Scottish government has been forced to cut £392m from public spending plans after the Office for National Statistics ruled that the level of government control over a major PFI project meant that keeping it off the books breached EU rules.

The move follows last year's ONS ruling that the Scottish government's £1.45bn Aberdeen bypass wasn't really a private finance project under EU law because of the level of control the Scottish government retained over it. They have been forced to put that spending on the books and have preemptively moved two new hospitals and new headquarters for the Scottish blood transfusion service onto the books for this year leaving a £392m black hole in the Scottish government's finances.

Despite campaigning against PFI in Scotland, the SNP has extended the PFI scheme there. They've called it NPD instead of PFI but it's the same thing. To balance the books the Scottish government are having to postpone uncommitted grants and use contingency money to cover spending.

The Scottish government have also been warned that planned legislation to allow them to hide PFI liabilities for its social housing programme will likely fall foul of the same EU rules.