Wilson's Weekly Wrap: Public funding - mind the gap, Become a planner in 24 hours and Dock on the rocks
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March 17 2009Public funding – mind the gap
What is it about simple economics that supporters of PFI/PPP just don’t get? Politicians are particularly susceptible to the idea of getting buildings and infrastructure on the never-never, but complaints that the Scottish government hasn’t been using the mechanism to build schools and other public works as a means of boosting employment have reached a crescendo of late, and mostly from people who – if they didn’t have a vested interest in the process - ought to recognise that the public piggy bank isn’t just empty, its lying smashed to bits on the floor.
A couple of weeks ago I mentioned Chancellor Alastair Darling’s mad hatter’s tea party scheme to lend £2bn of public money to PFI/PPP consortia to enable them to continue to build projects that they can then charge the taxpayer usurious repayment rates for. The latest statistics on the subject to come out of Victoria Quay, however, clearly demonstrate that this is quite simply the road to hell. Over the next 30-35 years, the legacy of PFI/PPP in Scotland will cost £30bn to repay. Sure, you can amortise this over the number of new schools and hospitals that have emerged in recent years and pretend to yourself (a) that they wouldn’t have happened otherwise and (b) that the average cost is an affordable one. Tragically, you only have to look at one example amongst the figures released this week to realise the folly of it all: Hairmyres Hospital in Lanarkshire has a capital value of £68m but will in the end cost us all £725m, more than ten times as much.
Now, irrespective of your political standpoint, the credit crunch of which PFI/PPP is but one contributory manifestation has ensured that there will be considerably less public money available for spending in the future. £30bn of repayments over 30 years is £1bn per year (rising to £1.168bn in 2024-5), a figure that currently equates to 3.3% of Scotland’s annual block grant from Westminster. Bailing out the banks has ensured that the block grant will in future be considerably lower, meaning that the proportion of expenditure devoted to repaying PFI/PPP commitments will exponentially rise with the consequence that almost all public services will find their budgets significantly reduced. Those hoping that the construction sector will be re-stimulated over the next few years by an uplift in public expenditure can dream on: salvation is unlikely to be found from that quarter and the industry needs to come up with its own Plan B pretty sharpish.
Become a planner in 24 hours
In troubled times you can depend on your professional institutions to come up with real solutions. Or not. With record numbers of architects now claiming unemployment allowances, the RIBA and the Association of Consultant Architects (ACA) have set aside their normal spats over the copyright of contract documents and come together to establish their very own ‘Recovery Task Force’. Clearly the brief to the members of this team of Action Men has been to think radically, and boy have they come up with a stormer of an idea: give up architectural practice.
It’s not presented quite like that of course – no, what they have in mind is an induction course in planning that embraces 12 evening classes and which will deliver a new battalion of completely unqualified bods to sit behind desks in understaffed planning departments the length and breadth of the country. Naturally, and with true metropolitan arrogance, this presumes that all of the unemployed architects out there have the wherewithal to get themselves to London once a week for three months to attend the course. And want an underpaid job in a morale-free environment.
You can see it now, can’t you: this new, slightly resentful, planning officer sizing you and your application up, sniffing at the quality of a design he fully believes he could do better in his sleep and making careful noises to the effect that you need to employ him in your office to do just that. For the more cynical architectural practice (sadly, there are a few around) it’s worth a punt: with his new-found planning insight, the scheme should breeze through the application process and you can always make the poor sod redundant again thereafter.
In fact, the scheme is almost as good as UK government plans to offer six-month courses to professionals to retrain as teachers, but while the latter is a fabulous palliative that eschews any political initiative designed to get the construction industry on the move again this side of an election, the inaugural idea of the Recovery Task Force is an absolute shocker, since it not only belittles the skills of the planning profession, but also suggests that unemployed architects have neither the skills nor the experience to be of future use to anyone. Aside from the monumental slight to their own members, it is hardly the inspired approach needed to address the iniquities of the planning process.
Some opportunities are more equal than others
On the same general theme of re-employment opportunities - but a bit more believable this time since it’s a real as opposed to a possible job - is the Scottish Government advertisement that has appeared at great expense in almost every UK national newspaper. Looking for a ‘Building Construction Professional – Environment’ in the Building Standards section of the Directorate for the Built Environment, the total cost of the advertisements – some in full colour – must have come close to at least a year’s worth of the offered salary, but no matter: in an inclusive world, opportunity must be offered as widely as possible. Just don’t let anyone tell you the civil service out there in Livingston hasn’t learned how to get round EU employment legislation: the post requires “proven experience in the Scottish building standards system (and associated legislation)”, which doesn’t suggest there’s much of an opening for anyone looking to relocate north in response to the ad in the Sunday Times. In any case, you also need to have relevant professional status, “like membership of the RIAS”. Yes folks, there is at least one agency out there that feels membership of one of the architectural profession’s institutions is important. Funnily enough, the ads don’t mention any requirement for RIBA or ACA status.
Docks on the rocks
‘No immediate value’: that’s the surveyor’s assessment of 80% of Forth Ports plc’s land bank on Edinburgh’s waterfront. The company has just announced its 2008 financial results and they don’t inspire much confidence in the future of its plans for developing the capital’s northern edge. The Wrap is far from alone in having had precious little confidence in these plans before the world’s economic structures went into meltdown but, as First Minister Alex Salmond is so often fond of quoting, ‘facts are chiels that winna ding’. The value of the company’s waterfront land holdings has been slashed by £222m to a measly £60m, and with debts standing at £208m and a loss last year of £30.7m there must be serious doubt as to whether or not it could survive as a viable entity without the lucrative income it gets from the seven commercial ports it operates. Not that this should come as a surprise to anyone - ever since the company was privatised it has shown considerably more aptitude for port operation than for property development and only the rampant market in the latter disguised its less than dynamic performance.
More to the point, we are now a very, very long way from the realisation of the plans presented at the tail end of last year for a £700m development of nine “urban villages” on the shoreline, two of which – in an ingenious inversion of what normally denotes charming hamlets - were to feature a new cruise liner terminal and visitor centre for the Royal Yacht Britannia, 1900 residential units, 16000 sq.m of retail, 99000 sq.m of office space and 19000 sq.m of leisure facilities including five hotels. These plans were hugely disliked by residents of the capital’s port, an antipathy that manifested itself in a tidal wave of opposition to the company’s fast buck notion to replace the historic name of Leith with ‘Edinburgh Harbour’.
Forth Port’s chief executive, Charles Hammond is bullish nevertheless, insisting that the company could still realise its 30-year plan to revitalise the Leith Docks area: “Nobody has ever given guarantees on timescales. We have always said that it is a long term process of more than 20 years and nothing has changed.” Sadly, much the same could be said of its achievements on Edinburgh’s waterfront over the last 20 years. That is, of course, as long as you are prepared to accept developments like ‘Platinum Point’ and ‘The Element’ as positive additions to the architectural and urban credentials of the shoreline. If you’re of a more sceptical persuasion, however, you have to ask whether a privatised company with manifestly divided interests is the best agency to produce the balance of elements needed to establish a vibrant waterfront on a north facing shore.
A shore thing
It’s been a few weeks since we last reported on Donald Trump, but the great man appears to have been sitting on his hands recently when it comes to investment opportunities. Asked whether he might put £40m of his small change into buying the Jack Nicklaus-designed golf development on the Ury Estate near Stonehaven from the administrators of FM Developments, Don Comb-leone’s man in old Scotia, George Sorial, ventured that the project wasn’t big enough.
The Trump Organisation has speculated that it could save around £300m on the golf resort it plans for the Menie Estate in Aberdeenshire by securing contracts on falling material and construction prices and Mr Sorial has said that this would generate cash “to help rescue collapsed building projects worldwide”. Which brings us back to Forth Ports – can there really be a better example anywhere of this particular genre than Edinburgh’s waterfront? And might the great man usefully divert some of his savings on the £1bn he apparently has available for golf course development into buying the company (current market capitalisation: £373.6m)? thereby gaining the double possibility of new links courses formed from material dredged from the river and a boardwalk of casinos to replace his (purportedly now bankrupt) outposts in New Jersey’s Atlantic City? Too good to miss really: it’s over to you Don.
I was a tad surprised to be upbraided last week by A+DS in response to my comments about its Annual Report, although curious that the splenetic reaction of its Communications Manager was more to my statement that its Financial Statement was nowhere to be found on its website (it is if you look hard enough) rather than to my criticisms of the Report’s contents and my suggestion that the organisation tries harder next time.
More worryingly, the organisation’s reaction came to me second-hand via the editor of the architecturescotland website who was subjected to a tirade the like of which Alastair Campbell would have been justifiably proud. Demanding that the website proprietors stop publishing the Weekly Wrap is certainly an interesting approach to getting the A+DS message across, but not quite the standard of advocacy, I would venture to suggest, that the organisation was put in place to promulgate. Still, with its fourth birthday due next month, I suppose it’s early days yet and I look forward to better things ahead.
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