Committee
Justice 1 Committee, 22 May 2002
22 May 2002 · S1 · Justice 1 Committee
Item of business
Prison Estates Review
I do not want to talk about Mr Brewer's professional independence or even his professional integrity. I, for one, will not be suggesting that the Carmelites should have been appointed in your stead. I want to discuss the introduction to the review. It says:"We have been engaged by the Scottish Prison Service ("SPS") on behalf of Scottish Executive Justice Department to undertake a financial review to support investment decisions that form part of the SPS Estates Review."Is "financial review" a particular term of art?
In the same item of business
The Convener (Christine Grahame):
SNP
I open the 21st meeting this year of the Justice 1 Committee. This is a marathon week for us as we have many meetings. I ask everyone to ensure that mobile p...
Martin Mathers (Chartered Institute of Public Finance and Accountancy in Scotland):
CIPFA is in fact the Chartered Institute of Public Finance and Accountancy.
The Convener:
SNP
I said the wrong thing. That is a bad start.
Martin Mathers:
CIPFA is a membership organisation and one of the six chartered accountancy bodies in the United Kingdom and Ireland. We are a charity and serve two function...
The Convener:
SNP
As they have nothing to add, Michael Matheson can ask his question.
Michael Matheson (Central Scotland) (SNP):
SNP
I notice that the CIPFA publication "PFI/PPP: Stewardship Issues" discusses the impetus for considering the private finance initiative, public-private partne...
Derek Yule (Chartered Institute of Public Finance and Accountancy in Scotland):
The line that CIPFA takes is that PFI is one of a number of options that must be explored. Over a number of years, there have been several examples of potent...
Grant Macrae (Chartered Institute of Public Finance and Accountancy in Scotland):
In the utilities sector, things can sometimes be tackled in different ways. PFI/PPP gives the opportunity to find different ways of arriving at the same solu...
Michael Matheson:
SNP
Would you say that the prison sector was a good candidate for PFI or PPP schemes?
Grant Macrae:
It is a possible candidate. A lot would depend on how prescriptive the specification had to be.
The Convener:
SNP
Given that a lot of our prepared questions are technical—I failed an accountancy exam once but passed it on the resit—do we agree to allow Professor McDaid t...
Professor Seamus McDaid (Adviser):
Chapter 4 of the CIPFA bulletin that Michael Matheson mentioned considers two primary strands underlying the development of PFI and PPP: first, value for mon...
Grant Macrae:
CIPFA is keen to see that the value-for-money and innovative solutions strand is considered first; the accounting treatment—whether it be on balance sheet or...
Derek Yule:
On off-balance-sheet accounting, the main issue for local government has been capital expenditure controls in existing legislation. The reason for securing o...
Professor McDaid:
Does that have an impact on how a discounted cash flow for net present-value calculations for a PPP and a public sector option might be presented?
Grant Macrae:
It does not affect the calculation at all. The calculation will be done in exactly the same way.
Professor McDaid:
What would be the impact of financing through borrowing as opposed to financing through cash reserves?
Derek Yule:
Public sector bodies do not have such cash reserves. Certainly, no Scottish body has the cash reserves to fund a project of the magnitude that would be consi...
Grant Macrae:
That is a fair way of describing most parts of the public sector. Major projects are financed either by borrowing in accordance with Government guidelines or...
The Convener:
SNP
I would like to ask what is perhaps a stupid question, which will put on the line my understanding of accountancy. Are you saying that the Scottish Prison Se...
Grant Macrae:
My understanding is that limitations might be placed on the SPS in relation to how much it could borrow in a given period. However, there is no absolute ban ...
The Convener:
SNP
So could the SPS borrow just as private companies such as Premier Prison Services can?
Grant Macrae:
Only in the sense that it must limit its borrowing to what the Government allows it to borrow in a specific accounting period. What it borrows forms part of ...
The Convener:
SNP
There are restrictions. That is what I was getting at. I see now what you mean.
Donald Gorrie (Central Scotland) (LD):
LD
If there was a facility for borrowing—for local authorities, prisons or whatever—that made sense, unlike the present Treasury rules, which do not make sense,...
Martin Mathers:
It has certainly been the case in the past that the public sector could get money more cheaply by going through the public sector borrowing route. That is be...
Grant Macrae:
It is fair to say that, at the moment, there are limitations on how much any public body can borrow in a given period. If a public body has an agenda and nee...
Donald Gorrie:
LD
Has any research been done to show that PFIs produce benefits for communities?
Martin Mathers:
Benefits for communities?
Donald Gorrie:
LD
Mr Macrae said that part of the rationale of a PFI was that it was a way of doing things that would provide a benefit to the community. I wondered what resea...