The Financing Of
The Water Industry In Scotland, Utility Pricing, and PFI.
Did Flaws in the Application of
Resource Accounting and Budgeting Distort the Strategic Review of Water Charges
in Scotland
Cuthbert, J.R., Cuthbert, M.: Fraser of Allander Institute Quarterly Economic Commentary, Vol 28,
No 4: (December 2003).
Our original paper on water, which, on the basis of the limited data then
available, hypothesised that things had gone very badly wrong with the Strategic
Review of Water Charges 2002-06, leading to substantial overcharging. Much more
evidence has emerged subsequently, (see later papers), all of which confirms our
original hypotheses.
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Deep Water for the Scottish Executive
Cuthbert, J.R., Cuthbert, M.: Scottish Left Review, Issue 21: (March/April 2004).
Summarises the position on water charges in early 2004.
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paper
How the Strategic Review of
Charges 2002-06 Casts a Long Shadow over Future Water Charges in Scotland
Cuthbert, J.R., Cuthbert, M.: Fraser of Allander
Institute Quarterly Economic Commentary, Vol 30, No.4: (2006).
Uses the considerable amount of information which has emerged since our
original paper to give a definitive account of five significant errors in the
strategic review 2002-06: and assesses likely implications for overcharging in
2006-10.
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See also
accompanying chart.
Water: A Suitable Case for
Treatment
Cuthbert, J.R., Cuthbert, M.: Scots Independent, Issue no. 927, May 1,
2006
Popular summary of position on water charges.
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Risk and Profit: Unanswered Questions about the Strategic Review of Water Charges 2006-10
Cuthbert, J.R., Cuthbert, M.: Fraser of Allander Institute Quarterly Economic Commentary, Vol 31, No.1: (2006).
This paper shows that the application to Scottish Water of unmodified OFWAT financial ratios and targets, (as was done in the strategic review of charges for 2006-10), is unjustifiable: the result was significant overcharging of customers. Also identifies an apparent inconsistency with the conventions used by OFWAT, in the projected current cost profit and loss account in the strategic review. The result is that projected profits of Scottish Water are likely to have been significantly understated.
How the RCV Method Implies Excessive Returns on Capital Expenditure.
Cuthbert, J.R.: response to OFWAT/OFGEM discussion document on "Financing Networks", published on OFGEM website: (August 2006).
This paper contains financial modelling indicating that there is a fundamental problem with the Regulatory Capital Value (RCV) method of setting utility prices. This leads to overcharging of consumers, excess profits, and distortion of the capital investment programme of the utility. This has significant implications, since the RCV method is employed by utility regulators worldwide.
Water: The Birth of a Cash Cow. Why water privatisation in Scotland is inevitable unless we rethink the basis of utility pricing.
Cuthbert, J.R., Cuthbert, M.: talk given at conference on "Neo-liberal Scotland: Rethinking Scotland in a Global Context", at the University of Strathclyde, 20th May 2006.
This paper identifies a key issue in the campaign to prevent water privatisation in Scotland: this is the requirement to mount an effective challenge to the RCV method of utility pricing, (as currently implemented in Scotland, and by OFWAT).
Drowning in Self Interest: the Key Battleground in the Coming Struggle to Prevent Water Privatisation
Cuthbert, J.R., Cuthbert, M.: Scottish Left Review, Issue 36: (September/October 2006).
This paper develops some of the themes of the preceding talk. (Note that the version of the paper published in the Scottish Left Review lost a few sentences in editing. The version of the paper given here is the original version.)
A Rejoinder to Midwinter and Simpson: and how their notes raise further concerns about the financing of the water industry in Scotland.
Cuthbert, J.R., Cuthbert, M.: Fraser of Allander Institute Quarterly Economic Commentary, Vol 31, No.3: (2007).
This paper is a rejoinder to criticism of earlier papers of ours on water made by A. Midwinter and D. Simpson. The paper contains outturn figures from the accounts of Scottish Water for the period 2002 to 2006, which show that we were absolutely right in our prediction that there had been serious errors in setting water charges, with customers being potentially overcharged by approaching £600 million in total over this period. Also of particular interest is a copy of an internal Scottish Executive memo, which we obtained under the Freedom of Information Act, and which is reproduced in this paper.
Fundamental Flaws in the Current Cost Regulatory Capital Value Method of Utility Pricing
Cuthbert, J.R., Cuthbert, M.: Fraser of Allander Institute Quarterly Economic Commentary, Vol 31, No.3: (2007).
This is our definitive critique of the current cost RCV method of utility pricing, as widely used in water and other utilities in the UK, and also in other countries. This paper was sent to Ofwat for comment after publication: Ofwat's response can be accessed here, as can our reply to Ofwat, which shows there is no substance in Ofwat's attempted rebuttal of our criticisms.
Overcharging for Water: Fundamental Flaws in Utility Pricing in the UK
Cuthbert, J.R., Cuthbert, M.: Powerpoint presentation of seminar given at University of Edinburgh, Centre for Public Health Policy, 30th April, 2007.
Seminar given at University of Edinburgh on ground covered in previous paper.
A Rejoinder to Jo Armstrong's Critique of Our Paper on Utility Pricing
Cuthbert, J.R., Cuthbert, M.: September 2007.
In the Fraser of Allander Institute Quarterly Economic Commentary, Vol 31, No.4, Jo Armstrong published a critique of our paper in volume 3 of the same commentary, (see above), which had argued that there were fundamental flaws in the current cost regulatory capital value method of utility pricing. This is a rejoinder to Armstrong. We would normally have published our rejoinder in the Fraser of Allander Commentary: but the Commentary has, very unfortunately, ceased publication following a recent decision by the University of Strathclyde. The Fraser of Allander Institute have, however, published our rejoinder on their website. As regards her critique, Armstrong accepts the technical aspects of our criticism of CCRCV: but then goes on to argue that special circumstances in Scotland justify the continuation of CCRCV pricing in the water industry in Scotland. As we explain in detail in our rejoinder, we find Armstrong's position on this unsustainable.
The Fundamental Flaw in PFI? The Implications of Inappropriate Indexation of that Element of the Unitary Charge Covering Finance Costs
Cuthbert, J.R.: this paper will be published shortly by the STUC.
A technical note, suggesting that a fundamental flaw with PFI, leading to excess profits for PFI providers, is the inappropriate way that the non-service element of the unitary charge is uprated for inflation. Subsequent work we have undertaken, looking at some of the detailed financial projections for PFI schemes now becoming available because of the Freedom of Information Act, very much confirms the analysis in this note: we will report on this subsequent work in due course.
PFI: The Need for an Urgent Enquiry
Cuthbert, J.R., Cuthbert, M.: Scots Independent, Issue 944, October 1st, 2007.
This article suggests that a thorough enquiry into the PFI scheme is now required, in the light of the findings outlined in the previous note, and other concerns about the operation of PFI.
Scottish Water Solutions: is this what we want from a Public Corporation?
Cuthbert, M., Cuthbert, J.R.: Scots Independent, Issue 945, November 1st, 2007.
This article highlights the unsatisfactory situation as regards Scottish Water Solutions, the special vehicle set up to deliver a large part of Scottish Water's investment programme, and points out some of the adverse consequences for Scotland.
Cuthbert, J.R., Cuthbert, M.: Scottish Left Review, Issue 43, November/December 2007.
This article is intended to be an accessible account of the errors in PFI, and shows how, in the light of additional information now becoming available under the Freedom of Information Act, PFI can truly be described as providing "one for the price of two".
Rejoinder to Partnerships UK on their Comments on the Paper 'The Fundamental Flaw in PFI?'"
Cuthbert, J.R.: December 2007.
The above paper on "The Fundamental Flaw in PFI?" was copied to Partnerships UK by the Scottish Government. Partnerships UK came back with comments, which can be accessed here. This paper is a rejoinder to Partnerships UK's comments. The fundamental weakness in Partnership UK's comments is that they are largely based on a description of how PFI should work, rather than being founded on an evidence based analysis of how PFI actually works.
The Need to Review the ONS Approach to Including PFI Liabilities in the Public Sector Net Debt
Cuthbert, J.R.: paper SESCG2008/1/1, discussed at Scottish Economic Statistics Consultants' Group, January 9th 2008.
This paper discusses the implications for the way in which the Office for National Statistics treats PFI schemes in the national accounts, of the new information on the operation of PFI which has recently become available under Freedom of Information. The paper argues that ONS needs to review its test of whether PFI schemes appear "on the Government's books", with the likely implication that more schemes would come onto the books.
Cuthbert, J.R., Cuthbert, M.: Scots Independent, Issue 948, February, 2008.
Report on a meeting held at Scotland House in Brussels, as part of the international campaign to reclaim water for public ownership.
The Implications of Evidence Released Through Freedom of Information on the Projected Returns from the New Royal Infirmary of Edinburgh and Certain Other PFI Schemes.
Cuthbert, J.R., Cuthbert, M.: paper given as evidence to the Finance Committee of the Scottish Parliament, in connection with their inquiry into the methods of funding capital investment projects: paper also available on Finance Committee website, (March 2008).
Analyses the financial projections now available for six PFI schemes, and gives performance measures indicating the high costs, and high levels of profit, projected for these schemes. This evidence is entirely consistent with the hypothesis about the effects of inappropriate indexation, as put forward in the paper above, titled "The Fundamental Flaw in PFI ?".
The Royal Edinburgh Infirmary: A Case Study on the Workings of the Private Finance Initiative.
Cuthbert, M., Cuthbert, J.R.: paper given as evidence to the Finance Committee of the Scottish Parliament, in connection with their inquiry into the methods of funding capital investment projects: paper also available on Finance Committee website, (March 2008).
Based on a study of the nine thousand or so pages of supporting documentation on the New Royal Infirmary of Edinburgh contract, now released under Freedom of Information. This paper identifies a number of problems with the procedures of PFI: the effect of these problems would be to largely invalidate the standard value for money and affordability tests in PFI.
The Scottish Futures Trust: What we should be looking out for.
Cuthbert, J.R., Cuthbert, M.: Scots Independent, Issue 950, April, 2008.
In the light of what we now know about PFI, this paper suggests various questions which will need to be asked about the Scottish Government's proposals for a Scottish Futures Trust, if the problems with PFI are to be avoided.
Response to Scottish Government Consultation on Scottish Futures Trust
Cuthbert, J.R., Cuthbert, M.: also available on Scottish Government website: submitted March 2008.
Builds on our research on the behaviour of past PFI schemes to make a number of suggestions about the Scottish Futures Trust. In particular, that radical improvements are necessary in monitoring, and in public sector expertise: that the handling of risk needs to be greatly improved: that the Treasury needs to be tackled on a number of issues, like the capital charge and VAT, which currently adversely affect PFI: and that there would be significant advantages in unbundling PFI schemes into smaller components.
The Capital Charge: Problems Arising from the Misapplication of Current Cost Accounting
Cuthbert, J.R., Cuthbert, M.: paper to the Finance Committee of the Scottish Parliament, in connection with their inquiry into the methods of funding capital investment projects: paper also available on Finance Committee website, (May 2008).
We were invited to submit this note following our appearance at the Finance Committee on 29th April. The note explains how one of the factors contributing to the observed problems with PFI has been the implications of the government's capital charge rules: this in turn relates to a more basic problem concerning the misapplication of the principles of current cost accounting.
Cuthbert, M., Cuthbert, J.R.: paper submitted to the Finance Committee of the Scottish Parliament, in connection with their inquiry into the methods of funding capital investment projects: paper also available on Finance Committee website, (May 2008).
This note provides a description of PFI refinancing, and highlights a number of issues which have arisen in refinancing deals.
Analysis of the Financial Projections for Two Non-Profit Distributing PFI Schemes: and Implications
Cuthbert, J.R., Cuthbert, M.: paper submitted to the Finance Committee of the Scottish Parliament, in connection with their inquiry into the methods of funding capital investment projects: paper also available on Finance Committee website, (September 2008).
The Non-Profit Distributing model is a variant of PFI which is likely to play an important role in the Scottish Government's proposal for a Futures Trust. This note analyses the financial projections for two of the first NPD schemes, and identifies a number of issues that need to be addressed.
An Opportunity Waiting to be Grasped
Cuthbert, J.R., Cuthbert, M.: Scots Independent, Issue 956, October, 2008.
This paper proposes a new approach to setting water charges in Scotland, under which capital formation financed from customer charges would be regarded as a notional loan from the customer base to Scottish Water. This would be a fully sustainable approach, which would have the advantage of ultimately delivering much lower water charges.
A Recommendation on How the Method of Setting Water Charges in Scotland Should be Changed: Customer Financed Capital as a Notional Loan to the Utility
Cuthbert, J.R., Cuthbert, M.: Fraser of Allander Economic Commentary, Vol. 32, No.3, February, 2009.
This paper sets out the analysis underlying our proposed new method for setting water charges in Scotland, (which was the subject of the article immediately above).
The Need to Change Water Pricing in Scotland
Cuthbert, J.R., Cuthbert, M.: Sunday Herald, 1st March, 2009.
A popular version of the previous paper.
A Comment on Martin Kellaway's response to Paper SESCG 2008/1/1
Cuthbert, J.R.: note discussed at Scottish Economic Statistics Consultants Group, 7 May 2009.
This is a follow up to the earlier paper, "The Need to Review the ONS Approach to Including PFI Liabilities in the Public Sector Net Debt", which appears above. ONS responded with a comment on that earlier paper: that comment can be accessed here. This note is a response to the ONS comment, and argues that the ONS position on accounting for PFI liabilities remains unsatisfactory.
Submission of Written Evidence to House of Lords Economic Affairs Committee: Inquiry into Private Finance Projects and Off-balance Sheet Debt
Cuthbert, J.R., Cuthbert, M.: submitted 21st September 2009.
Our evidence brings together various strands of our research on PFI, including the question of how PFI schemes should be reflected in the national accounts.
The Danger to Scotland's Water from Flawed Utility Pricing
Cuthbert, J.R., Cuthbert, M.: article published in Julie Hepburn's blog "destiNation", October 2009.
This is the first of what is planned to be an occasional series of contributions to Julie Hepburn's blog, "destiNation". A link to destiNation is given in the "Useful links" section of this site.
Briefing Note on Water Pricing for Holyrood Magazine
Cuthbert, J.R., Cuthbert, M.: November, 2009.
This is a briefing note on water pricing which we produced for Holyrood Magazine, and which formed the basis for a feature on water published in the November 9th issue of the magazine. Following a comment from the Scottish Government, a letter from us was published in the 23rd November issue of the Holyrood Magazine: a copy of this letter can be found here.
Time to De-mythologise Government Accounts
Cuthbert, J.R., Cuthbert, M.: Scots Independent, Issue 970, December 2009.
One of the many failures associated with the current economic crash has been a failure of government accounts to detect the emerging problems. This note uses the example of PFI to show how government accounts understate the true scale of the public sector's liabilities - and argues that there is a need to move government accounting into a new era of openness.
Failure to Learn the Lessons of PFI
Cuthbert, M., Cuthbert, J.R.: paper published as "Re-inventing a Faulty Wheel" in Scottish Left Review, Issue 56, Jan/Feb 2010.
This article reports on a study we carried out, analysing the bidding process for 37 schools PFI schemes in Scotland. This study identifies several flaws in the PFI process. Unfortunately, the lessons which should have been learned from this past experience with PFI have not been taken on board in the design of the Scottish government's Futures Trust.
The Handling of PFI Leasing Charges in Government Accounts: The Implications of Information on How PFI Schemes Actually Behave
Cuthbert, J.R., Cuthbert, M.: Seminar given at University of Strathclyde, Department of Accounting, 5th March 2010.
This seminar looks at the implications of Freedom of Information data now available on a sample of PFI schemes for the way these schemes are handled in government accounts. The data suggests that the financial liabilities associatd with PFI are significantly understated in the accounts of individual public sector bodies, and in the national accounts.
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The importance of correcting the errors in the current model for water pricing in Scotland, before decisions are taken on alternative ownership models for Scottish Water.
Cuthbert, J.R., Cuthbert, M.: Submission to Independent Budget Review, April 2010.
The independent budget review was commissioned by the Scottish Government. The title of this submission is self explanatory.
The need to maximise the economic benefits of
the activities of Scottish Water.
Cuthbert, M., Cuthbert, J.R.: Submission to Independent Budget Review, April 2010.
This submission to the independent budget review argues that there are very direct ways in which a publicly owned Scottish water could be better managed to bring real returns to the Scottish economy and people.
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How to have your cake and eat it: Government
accounting for PFI
Cuthbert, J.R., Cuthbert, M.: Scottish Left Review, Issue 58, May 2010.
An edited version of this article appeared as “Hiding our Debts” in the above issue of the Scottish Left Review. The article outlines failures in government accounting for PFI schemes, resulting in significant understatement of the true extent of public sector liabilities: (this article covers similar ground to the above Powerpoint presentation on our Strathclyde seminar.)
Beveridge and Water: the worst deal ever
Cuthbert, J. R., Cuthbert, M.: Scots Independent, Issue 979, September 2010.
Follows on from our Sunday Herald article on Beveridge, (under Theme 2), and
argues that there are further compelling reasons why implementing the Beveridge
recommendation on water would be disastrous.
The Royal Infirmary of Edinburgh: a case study on the workings of the Private Finance Initiative.
Cuthbert, M., Cuthbert, J. R.: Public Money and Management, Volume 30, Number 6,
November 2010.
Identifies multiple problems with the implementation of the NRIE project:
problems which are likely to have wider implications for PFI generally. (Based
on freedom of information material which formed the basis of our previous
submission to the Scottish Parliament Finance Committee: see above.)
The Concept of the Reference Node Invariance Threshold.
Cuthbert, J. R., Paper submitted as evidence to OFGEM TransmiT Review, and also available on Project TransmiT Web Forum: November 2010.
This paper demonstrates that the transmission charging model used by National Grid cannot have the optimal pricing properties claimed for it.
Why the Current Cost Charging Method Used in the NG Transmission Model Needs to be Reviewed.
Cuthbert, J. R.,Paper submitted as evidence to OFGEM TransmiT Review, and also available on Project TransmiT Web Forum: November 2010.
Another submission to the TransmiT review. Considers the version of the current cost charging model used by National Grid, and shows that there are serious problems with the model.
Inflation and the Private Finance Initiative.
Cuthbert, M., Cuthbert, J. R.: Public Finance, (blog section), 28 January 2011.
Describes a study we carried out, looking at how payments for schools PFI contracts in Scotland are indexed for inflation. Demonstrates that many authorities are committed to making increases in their own contributions at well above the rate of inflation.
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The Effect of PFI Commitments on Local
Authority Finances.
Cuthbert, M., Cuthbert, J. R: Fraser of Allander Economic Commentary, Volume 34, No.3, March 2011.
This is the full report on our study on indexation arrangements in schools PFI contracts, as reported on briefly in the preceding item.
Commuters pay cost of rail capital pricing model
Cuthbert, J.R.: Public Finance (blog section), 25th August 2011 .
Argues that a factor which has been neglected in the recent publicity about rail fare increases has been the overcharging implicit in the current cost pricing model used for capital. This note is supported by a worked example, which can be accessed in a technical note here.
The civil service response to our proposal for changing the pricing system for Scottish Water.
Cuthbert, J. R., Cuthbert M.: Fraser of Allander Economic Commentary, Volume 34, No.4, November 2011.
In an earlier article in the Fraser of Allander Commentary, we had put forward a proposal for an alternative approach to setting water charges in Scotland. We received no formal response from the Scottish government: but we eventually obtained a copy of the internal civil service brief advising Ministers on our proposal. This paper is our critique of the civil service brief. We demonstrate that the advice put to Ministers was seriously flawed: in several respects the advice was factually wrong – and it also failed to address key issues which should have been covered in advice to Ministers.
Two Cheers for latest proposals to revise Electricity Transmission Charges.
Cuthbert J. R., Cuthbert M,: Scots Independent, Issue 996, February 2012.
Reports on the interim proposals emerging from the review currently being carried out by OFGEM on electricity transmission charges. This has very important implications for Scotland. We give the review proposals two cheers out of three. They will lower transmission charges for Scottish generators: but still do not tackle the excess charges implicit in the flawed current cost pricing element of the charging model.
Project TransmiT: Response to 20/12/2011 Consultation.
Cuthbert, J. R.: Response to OFGEM’s Project TransmiT consultation, February 2012.
Response to OFGEM’s consultation on electricity transmission charging, giving a qualified welcome to the latest proposals, but putting forward additional evidence demonstrating the need for further work on the current cost charging element of the OFGEM model.
How to Have your Cake and Eat it: Government Accounting
for PFI.
Cuthbert, J. R., Cuthbert, M.: World Economics, Vol 13, No.1, January-March
2012.
This is an updated and extended version of the article which first appeared in the Scottish Left Review in May 2010. It deals with various deficiencies in government accounting for PFI, which mean that the true extent of future PFI liabilities is substantially understated. The updated material in this version includes a critique of the way in which PFI is covered in the new Whole of Government Accounts.
Why IRR is an Inadequate Indicator of Costs and Returns in Relation to PFI Schemes.
Cuthbert, J.R., Cuthbert, M.: Critical Perspectives on Accounting, Vol. 23, Issue 6, pp 420-433, September 2012.
The internal rate of return is commonly used as an indicator by the public sector when assessing PFI schemes. This article shows why this indicator can be very misleading in the PFI context: and how its use can understate the true extent of the profitability of PFI schemes to the PFI equity holders by 30 or 40 percent.
Just Who Is It We Are Paying Our PFI Money to?
Cuthbert, M., Cuthbert, J. R.: Scots Independent, Issue 1002, August 2012.
One subject which has received relatively little attention is the lack of
knowledge about, and accountability of, the main shareholders of the special
purpose vehicles that operate PFI schemes. In this article we report on a study
of who owns Scottish PFI hospital schemes.
Excessive Profits and Overcharging: Multiple
Errors in the UK’s Model for Setting Utility Prices
Cuthbert, J. R.: Jimmy Reid Foundation Paper, August 2012.
This paper describes and analyses the UK model for setting utility prices,
using OFWAT’s experience of setting water prices in England and Wales as a case
study. The paper concludes that there are multiple errors in the model, leading
to overcharging, excess profits, and distortion of capital investment
priorities.
Evidence submitted to Water Resources Bill
Consultation of Scottish Parliament Infrastructure and Capital Investment
Committeee
Cuthbert, J. R., Cuthbert, M.: 29 August 2012.
In this evidence, we argue that a duty should be laid upon both Scottish
Water and the WICS to consider the wider impact of their actions on the Scottish
economy. We also argue that there should be a review of the pricing method used
by the WICS.
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Who Owns Our PFI Schemes: And Why It Matters
Cuthbert, M., Cuthbert, J. R.: Scottish Left Review, Issue 74, January/February, 2013.
This is a report on research on the operation of the secondary market in the ownership of Scottish PFI schemes. This paper contains a wealth of original data on who the ultimate owners of PFI schemes actually are, and highlights a number of issues of concern. Supplementary data can be accessed here.
Charging for Utilities, and Energy Infrastructure: How taking a cohort perspective strengthens the case against current cost charging
Cuthbert, J.R.: Jimmy Reid Foundation Paper, January 2014.
Develops a further aspect of the case against current cost charging, (and
complements the earlier Reid Foundation report on “Excess Profits and
Overcharging”, published in August 2012 – see above.) Shows how, for most
cohorts of consumers, current cost pricing will appear a very expensive way of
paying for capital investment in utilities and energy infrastructure.
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paper
PFI/NPD: How to avoid future problems.
Cuthbert, J. R.: Talk given at Commonweal meeting on PFI: Quaker Meeting Room, Edinburgh, 3 May 2016: text of talk also available on Commonspace website.
Considers some of the issues with PFI, and argues that much better monitoring is required if we are not going to run into problems with its NPD successor.
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Bundling or Bungling: the procurement of our public
sector infrastructure through the Private Finance Initiative (PFI), and
its subsequent reincarnations in Scotland.
Cuthbert, M.: Talk given at Commonweal meeting on PFI: Quaker Meeting Room,
Edinburgh, 3 May 2016: text of talk also available on Commonspace website.
Examines the effect of the very large size of individual PFI projects on the
wider Scottish economy.
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PFI/NPD: Issues and Data Sources
Cuthbert, J. R., Cuthbert, M.: Note produced for Commonspace, June 2016.
This note was produced for Commonspace to assist with Freedom of Information
requests in relation to PFI and NPD schemes.
Measuring the inadequacy of IRR in PFI schemes using
profitability index and AIRR
Cuthbert, J. R., Magni, C. A.: International Journal of Production Economics,
Volume 179, pp130-140, September 2016.
A fairly technical paper, which develops the links between the scheduling
effect defined in the September 2012 paper by Cuthbert and Cuthbert, (above),
and the concept of the Average Internal Rate of Return.
link to this paper on Social Science
Research Network
Edinburgh Schools Fiasco Suggests another Flaw in the Logic of PFI
Cuthbert, J. R., Cuthbert, M.: published on Commonspace, 5 October 2016.
Identifies another flaw with PFI: namely, that certain risks for the public sector may well be greater under PFI than under a conventional public sector approach.
Potential Dangers of Public Sector Investment in Hub
Sub Debt
Cuthbert, J. R.: Common Weal Policy Paper, April 2017.
The public sector partners in the Scottish Futures trust hub initiative have the right to invest in the subordinate debt, (that is, the risk capital)in hub projects. This paper looks at some of the resulting problems.
Some Aspects of Scottish Futures Trust and Hub Activities
J. and M. Cuthbert: Report commissioned by the Scottish Labour Party, published 18 October 2017.
This report is concerned with various aspects of the operation of the Scottish Futures Trust (SFT) particularly concentrating on the operation of the hub system. The report makes a number of criticisms, and recommendations for change.
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The Mysterious Tale of Edinburgh Council and the
Shoddy PFI Schools
M. and J. Cuthbert: Published on Commonspace, 14 December 2017.
Uses our experience of failing to get information on the Edinburgh schools’
PFI contract to highlight weaknesses in the operation of Freedom of Information.
Scottish Futures Trust Experience Illustrates Difficulties with Agencies
J. and M. Cuthbert: Published in Scottish Left Review, Issue 103, 15th January 2018.
Argues that one of the main reasons underlying the kinds of problems observed with the Scottish Futures Trust is the increasing tendency for governments to rely on agencies for the delivery of public services.
Inter-generational equity and the strategic review of water charges in Scotland
Cuthbert, J. R.: Fraser of Allander Economic Commentary, March 2018.
Argues that the proposals set out in the consultation documents for the next
review of water charges in Scotland raise serious issues, e.g of
inter-generational equity, which need to be addressed.
Public Private Partnerships: a formula for excess profits and failure
Cuthbert, J. R.: Commonweal Policy Paper, April 2018.
Explains why the excess profits, but also high failure rate, observed in
practice with Public Private Partnership schemes are inevitable consequences of
the way PPPs are designed.
The financial performance of Scottish Futures Trust (SFT) ‘hub’ schemes: the case for better monitoring and rethinking their rationale
Cuthbert, J. R.: published in the Fraser of Allander Commentary, Volume 43, No.
1, April 2019.
Analyses the financial projections for three “hub” schemes, and uses the
results to draw conclusions about the need for better monitoring.
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paper
Scottish Futures Trust: Time to Disrupt
Some Comfort Zones
Cuthbert, J. R.: published in Commonspace, 17th April 2019.
A companion piece to the preceding article, but considering the question of
why better monitoring of Scottish Futures Trust schemes has not been implemented
to date.
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The Introduction of the New MIM Model in Scotland: A Poor Decision, Poorly Taken
Cuthbert, J. R.: Commonweal Analysis Paper, 6th November 2019.
Analyses the decision to adopt the new Mutual Investment Model as one
approach to funding public sector capital investment in Scotland: argues that
there are flaws with the model, and with the way the decision was taken.
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Decision to Adopt Mutual Investment Model
Highlights Another Fiscal Settlement Danger
Cuthbert, J. R.: published in The National, 6th November 2019.
Argues that the decision to introduce the MIM model is an artefact of the
artificial constraints imposed on Scottish Ministers by the fiscal settlement,
which forces them to make sub-optimal decisions.
Comments on Audit Scotland Report
Cuthbert, J. R.: submitted to Public Audit Committee of the Scottish Parliament,
June 2020.
Evidence submitted to the committee, commenting on the Audit Scotland report
on hub and NPD models. Welcomes the report, but suggests how it could have gone
further.
Factors Affecting the Actual Return on Equity in a RAB Model.
Cuthbert, J. R.: Paper submitted to Department of Business, Energy and Industrial Strategy, March 2022: the BEIS response is also available here.
Paper submitted to BEIS, giving the results of a model of a RAB financed nuclear project, and pointing out some of the serious issues arising.
Nuclear RAB: Another aspect of Johnson’s toxic legacy
Cuthbert, J. R.: published as a Commonweal Policy Paper, 23 October 2022: and also on the Jubilee Scotland website, on the same date.
Explains why the funding model which has been chosen for new nuclear projects is particularly inappropriate, and makes it nearly inevitable that excessive windfall profits will accrue to the original equity investors.
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National Infrastructure Commission model spells trouble
for nuclear RAB funding
Cuthbert, J. R.: published on Public Finance website, 9 March 2023.
Examines another problematic aspect of the RAB funding model for new nuclear
plants: shows how this model will provide a particularly bad deal for consumers,
given the long construction periods now assumed for nuclear plants.