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Public Audit Committee
Meeting date: 6 June 2024
Richard Leonard
We will now move into the second half of this morning’s session. Mr Reekie and Ms Alexander, we may come to you with some questions that we would like you to answer. My first question, though, will be targeted at Mr Rennick. As I understand it, eight PFI projects within the education and justice division are due to end before 2030. This came up when Willie Coffey was asking you questions in relation to HMP Kilmarnock. Do any of those contracts have exit fees attached to them?
Public Audit Committee
Meeting date: 6 June 2024
Richard Leonard
Thank you.
Do you, from your horizon scanning, have any information that you can share about when you expect a particular surge in the number of PFI contracts reaching their expiry dates? Are you confident that we have the capacity to deal with any years in which there might be a particularly high volume?
Public Audit Committee
Meeting date: 6 June 2024
Richard Leonard
Again, I am struggling to understand under what circumstances the public sector would walk away from a lease. If you have a hospital that is 25 years old, you will not abandon it, presumably. I suppose that there may be circumstances where you might do that, but it is highly unlikely, is it not? In comparative terms, it will still be a relatively new piece of infrastructure that is running as part of the health service. I am struggling to understand why, under those circumstances, walking away would be considered an option and, therefore, why there is this exit fee premium to be paid.
Public Audit Committee
Meeting date: 6 June 2024
Richard Leonard
Good morning. I welcome everyone to the 18th meeting of the Public Audit Committee in 2024. We have received apologies this morning from Colin Beattie.
The first item on our agenda is for the committee to consider whether to take agenda items 3, 4 and 5 in private. Are we content to do that?
Members indicated agreement.
Public Audit Committee
Meeting date: 6 June 2024
Richard Leonard
Thank you for that. We will get into a bit more of the detail of that as the morning develops. I invite Willie Coffey to open the questioning.
Public Audit Committee
Meeting date: 6 June 2024
Richard Leonard
It would be useful for the committee if you could give us the comparison of the overall cost under the old model and the overall running cost under the new model, so that we can get an understanding about whether a transfer from a PFI-style contract into an in-house arrangement costs more or is about even. It may vary from situation to situation. Mr Rennick also has responsibility for schools, for example, so it may be that these issues are not so acute in other parts of the public sector where PFI transitions are likely to take place.
I also have one other issue to raise with you. For the record, Teresa Medhurst, are you saying that, on 1 December, there will be a big bang and that is when everybody in HMP Kilmarnock will move over to the SPS’ terms and conditions, or is there a period leading up to 1 December in which different cohorts will transfer to the new terms and conditions under the new contract?
Public Audit Committee
Meeting date: 6 June 2024
Richard Leonard
We have the chief executive of NHS Scotland coming before the committee before we break for summer recess, so we could consider the issue then.
My parting question is around lessons learned. Teresa Medhurst, I know that you and your colleagues are still in the middle of the transition but, even at this early stage, do you think that there are things that you might have done differently? Lorraine Roughan, when you go to Kerry Alexander’s collaborative workshops and share your experience, what are the dos and don’ts that you would take to that kind of get together?
Public Audit Committee
Meeting date: 6 June 2024
Richard Leonard
That is very insightful. Does anyone else want to come in with lessons learned, or things that we can do in relation to future examples of PFI expiries?
Public Audit Committee
Meeting date: 6 June 2024
Richard Leonard
We are in the middle of a general election campaign, Mr Reekie, so who knows what the future might hold.
I thank our witnesses this morning for their input. It has been very useful to us and the committee will have a continuing interest in this area, so I thank you for giving us some of those introductory lessons. We may go on to future phases of analysis and audit in the area, and I am sure that the Auditor General will be taking some notes from this morning’s session, too.
I now move the meeting into private session.
10:40 Meeting continued in private until 11:11.Public Audit Committee
Meeting date: 6 June 2024
Richard Leonard
My final question is for Mr Rennick. Looking at the scale of all this, I think that the total value of these contracts is £9 billion and that around half of that is in schools, is it not, which is your responsibility?