ppp header

The Highland Council PFI projects

Category: Schools

"We haven’t used PFI for ideological reasons we’ve used it because it has allowed us to upgrade the services that we’re providing for people in the Highlands. It’s allowed us to modernise the infrastructure, to create modern IT systems and build new schools."

Dr Alister Coutts, PPP Projects Director, The Highland Council

August, 2006

The Highlands of Scotland has the highest mountains and the deepest inland waters in Britain. It also has the lowest population density of any area of the UK.

The Council is the largest employer in the Highlands with an annual revenue budget of £650 million and capital investment of £50 million per annum.

The PPP Forum interviewed Dr Alister Coutts, Director of Property and Architectural Services and PPP Projects director at the Highland Council.

We have used the PFI extensively, and not for political reasons, either. We’re an authority that’s truly independent. 57 of our 80 elected members are members of no political party. So we haven’t used PFI for ideological reasons we’ve used it because it has allowed us to upgrade the services that we’re providing for people in the Highlands. It’s allowed us to modernise the infrastructure, to create modern IT systems and build new schools.”

According to Dr Coutts, PPP in the UK was, in fact, born in the Highlands. He lists the former Scottish Office projects:

Skye Bridge - £24 million
Inverness Airport Terminal -  £10 million
Highlands Sewage -  £45 million

Then the Highlands NHS projects:

Easter Ross Primary Care Centre -  £10 million
Craig Phadrig Psychiatric Unit -  £16 million

The Council itself began its first scheme back in 1998 with a £14 million pounds IT PFI.

I know that nowadays the guidance from Treasury is you shouldn’t use it for IT, but we used it very successfully and we’re just about to procure the second layer of a 10 year contract. I think it was successful because we were very clear about what we wanted the project to deliver and that was purely to procure and to refresh PCs, with standard software and access to the Internet.

We needed the PFI because we had a situation whereby there had not been the investment there should have been in IT for the council. We recognised that we had a particular problem in the Highlands because of the large distances between our centres of population. We needed our staff to have modern IT access in order to improve communications.”

The second project was for two primary and two secondary schools in remote geographic areas. The 25 year contract with a consortium consisting of MJ Gleeson and The Royal Bank of Scotland had a value of £75 million.

There had been a policy in the past, and I’m talking 10, 15, 20 years ago, where pupils from remote areas had to come and live in hostels in towns in order to go to school. We were determined to get away from that. We wanted the children, as far as possible, to have a normal family life without having to spend hours travelling.

Because we’re a cautious council, I say conservative with a small C, canny in the Scottish context; we’re careful with money we decided to begin with a fairly small scheme. The schools were small. We’re talking of secondary schools for 250 pupils and primary schools for 75. That’s, as was said by someone, really no more than large houses; large houses with seven classrooms and a games hall, a dining facility and one or two offices for staff. We were able to demonstrate that we could use PFI very successfully and provide these small facilities in record time so we decided to go ahead with a second, much larger education scheme.”

The second schools scheme is a £450 million 30 year contract to design build and operate 11 facilities. It reached financial close in March 2006 and the first school is planned to open in April 2007. Unusually for a PFI project there was only a single bidder but it was still allowed to go ahead.

We discussed it with the Executive who were worried about having a single bidder on such a large scheme but as we told them, we’d been down this route before and we knew we could deliver. The alternative would’ve been to go out and package it in smaller bundles, still using PPP, and we’d probably have ended up with three smaller schemes. But then that’s hardly cost effective. In value for money terms, it’s not a good idea. I think there was a lot of soul searching on the part of the Scottish Executive, and on the part of the Treasury, but in the end they said go ahead but we’ll be keeping an eye on you. You’ll be monitored much more closely than any other council. We had all of Scotland watching the project so we had to make sure it worked and it delivered value for money. For us that’s the most important thing: affordability, affordability, affordability.

Our first scheme was in a very rural environment and we were quite clear that we wanted the schools, as far as possible, to blend in with the surrounding landscape and other buildings. The architects that were working with at that time were quite happy to take on board the concepts that we had. The elected members, the pupils, the staff, the parents, are very, very happy with the design. They’ve blended in well and people like them.

I’m not so confident of the same round of applause for the second scheme. Let’s be clear, the schools meet, in every way, the output specification, but if we were designing ourselves, we probably wouldn’t be using the materials and the format they have. It might be acceptable in the centre of Scotland but it’s very radical for the Highlands. We told them that we probably wouldn’t produce what they’re producing but we recognise, under PPP, they have the final say and we just made the point that it’s probably not what we’d have done, and that’s where we currently stand. People here are not used to large, bold buildings so it’ll be interesting to see what the reaction is once they’re built.

We’ve always been fortunate, in the Highlands, that the quality of teaching has historically always been very, very good. Our levels of academic attainment in the Highlands are towards the top of the premier league in Scotland. The difference is that, as opposed to being in portacabins and substandard accommodation, with old fashioned chalk boards etc, etc, we are now able to provide, for increasing numbers of pupils, high quality education in a high quality environment. And we can also use these facilities for community activities."

The council has plans for further PFI schemes covering care homes, urban regeneration, property services and waste management.

On the whole the people of the Highlands, like their elected politicians, are very pragmatic. If PFI can provide the services and the facilities that are needed and if it can be demonstrated that it’s value for money, then they’re very happy for it to be used.”

But it would be impossible to discuss PFI in the Highlands without mentioning the demise of the Skye Bridge project.

It’s interesting that there were two early PPP schemes in the Highlands: Skye Bridge and the Inverness Airport Terminal. Now, very interestingly, the Skye Bridge was always campaigned against and the terminal was not. I think part of the reason was that everyone knew that the Skye Bridge was a PPP and there was a toll.

There was a feeling on the part of the council that the Skye Bridge should’ve been free. They wanted people to go to Skye and they felt that having to pay a toll would put people off visiting Skye. The council, as far as possible, does everything it can to avoid penalising tourists.”

The Highland Council serves 210,000 people in an area of 26,500 square meters which makes up 33% of Scotland’s land area and 11% of the UK total. That makes it larger than many countries of Europe.

I think the council’s view is that PPP has been a means to an end. The end has been to improve an environment for our school children and for the teachers, in which they can provide high quality education, and it’s been very, very successful.

We’ve no regrets whatsoever. It’s been a bonus that we’ve been able to do this at a very affordable level and that we’ve had, by and large, total support from the community.

The model we’ve adopted in the Highlands is a model that could be used anywhere in the world, particularly where it’s a remote, rural environment.

I’m very conscious that a number of countries have been quite surprised that a council on the very edge of Europe, in a remote geographic area, has been able to use PPP so successfully, and not just for schools or IT, but for, essentially, anything it can.

We’ve made it deliver and we’ve made it cost effective.”