PFI was an expensive folly that crippled our public services, as Edinburgh's schools have discovered

The easy credit of the Blair years encouraged an ostentation and extravagance that no taxpayers in their right mind would have endorsed – and we're still paying for it today

More then 9,000 Edinburgh school children are being kept at home while their classrooms and school buildings are examined for potential defects (Jeff J Mitchell/Getty Images)

More than 9,000 Edinburgh children had nowhere to go when the Easter holidays ended this week. Their schools – 17 in all – were closed for structural surveys to make sure, to be blunt, that they were not about to fall down. All the buildings concerned had been built by the same company, and paid for through Scotland’s equivalent of the Private Finance Initiative (PFI).

However unpopular, the decision to close the schools was necessary and inevitable. A serious construction fault had been found after a wall collapsed at Oxgangs primary in January, and the same defect had subsequently been identified in at least two more. The scale of criminal negligence claims if disaster had struck can well be imagined. The immediate test for the council will be how quickly these checks are completed, and how soon the remedial work, if required, is done.

Rightly or wrongly, though, critics have so far focused less on the construction company than the financing of these buildings. All 17 schools are owned and run by a private consortium, Edinburgh Schools Partnership, on a 30-year contract. The consortium makes a handsome profit and its shareholders have enjoyed dividends to match.

The attractions of PFI are not hard to divine – or rather, they once were not, for the mechanism is now pretty much extinct. It allowed governments and councils to finance new projects with only limited resort to public funds. Ageing schools, hospitals and other public amenities could be replaced – initially, at least – largely off the books. The authorities claimed the credit for shiny new developments, even as (for the time being) they kept taxes down.

For me, though I appreciate that Tony Blair and his circle still have a following, PFI was a quintessential New Labour project. If the beginnings of de-regulation can be placed – for good and ill – at Margaret Thatcher’s door, PFI belongs squarely to the Blair/Brown credit binge of the decade from 1997. Most of the schools currently in the spotlight in Edinburgh are typical; they are a little more than 10 years old.

PFI entailed a prodigious amount of borrowing, taken out with scant thought for the morrow. It came with an ideological bonus: helping to illustrate how well the political left (in its new, modern, guise) could get along with big business and what a mutually beneficial partnership you could create, if only you knew how. Except that those seduced by the prospect of such apparently easy money really didn’t know how.

You can say, if you like, that they – and we, as taxpayers – were ripped off. But it is surely the responsibility of government at every level to ensure that it has the expertise not to be so deceived. They had at their disposal accountants and lawyers able to read the small print. Yet the result is a disaster. Central government, local councils and health authorities all signed away not just the ownership of fixed assets but the right to arrange or subcontract the servicing. They now find themselves liable for escalating bills for decades – bills in which they have little or no say.

The plight of the NHS is particularly acute. When individual hospitals or trusts complain that they are in the red, they present this as though it is somehow our fault as patients for being too demanding, or this government’s fault for being unrealistically parsimonious. The harsher truth is that they must pay mortgages and running costs that were set at 1990s rates by private concerns and, in the end, there is no one but the tax-payer to bail them out.

Now it may be that some PFI projects can still be justified as having provided much-needed modern facilities that are cheaper to run than the patched-up Victorian piles they replaced. But the deceptively easy credit of the time seems to have encouraged ostentation and extravagance that no taxpayers in their right mind would have endorsed. These are exploitative hire-purchase agreements, the “never-never” of their day.

There is scarcely a new school, hospital or town hall that I have been in that does not distress me for its needlessly lavish scale – triple-height atrium; vast, barely-staffed reception hall; a winter garden, now derelict – even as basic essentials such as single-sex wards with their own bathrooms in hospitals or proper lifts in libraries and community centres are left out. Whoever signed off on such follies has bequeathed, not just debts for the next generation, but concrete monsters already entering premature obsolescence.

Mercifully, there are signs that the tide has turned. More schools are being designed and built with the budget in mind. Heads are reconciling themselves to off-the-peg models, rather than bespoke vanity projects. Value for money is back. But why was this not always so?

Whatever transpires in Edinburgh (it is not entirely clear whether we are looking at a financial issue, a construction issue, or both), there is an opportunity for Scotland to blaze another trail for the rest of the UK.

Recent Scottish governments have had the courage to enact reforms from which Westminster has at first shrunk. Scotland was the first to ban smoking in public places; the second, after Wales, to charge for supermarket plastic bags; and the first to set a minimum price for alcohol (though it has run into opposition from Brussels). Could it now become the first part of the UK to acknowledge - and address - the malign legacy of the Private Finance Initiative?

If so, the storm that damaged Oxgangs primary school in January will have demolished not just a wall, but the self-serving and ultimately extortionate policy that built it.