PFI branded Labour's 'toxic legacy'

Eadie, who has been a vocal critic of private finance schemes, said: “PFI is Labour’s toxic legacy in terms of what it has meant for the taxpayers – it has meant the hiving of NHS and education valuable resources which should be invested in vital public services.”

He pointed to the examples of the Edinburgh schools programme, which had capital costs of around £337 million, but the taxpayer’s repayments will cost around £1.2 billion and Edinburgh Royal Infirmary, which cost £180m to build but will add up to £1.4bn in repayments.

The use of private finance was vastly expanded under New Labour, in what was labelled public private partnerships (PPP), with both Tony Blair and then chancellor Gordon Brown enthusiastically embracing the idea.

Figures from the Treasury show 14 out of 80 projects which still have active contracts in Scotland were tendered were implemented before 1997, the year Blair came to power.

In Scotland, Jack McConnell was also a proponent of PFI when First Minister and clashed with unions over the issue.

The Treasury figures show 34 out of the 80 projects were tendered for between 2001 and 2007, when McConnell was First Minister.

A total of 47 PFI contracts were put out to tender between 1999 and 2006, when the Labour/Liberal Democrat coalition was in power at Holyrood.

However the Liberal Democrats said their party had led arguments at Westminster to try to persuade Brown to move away from his policy of PFI being the “only game in town” for capital investment.

A Scottish Liberal Democrat spokesman said: "The narrow Treasury rules meant that the Scottish Executive's hands were tied on capital investment.”

The use of private finance for public infrastructure is still ongoing in Scotland. The SNP ended the use of PFI and PPP contracts in 2007, but introduced a “non profit-distributing” (NPD) model. This still relies on co-operation between the public and private sector, but the SNP says it is more cost effective and there is a cap on the profits private companies can make.

Figures show there are 25 NPD projects currently under construction. Four are up and running, including Aberdeen Community Health and Care Village, which cost £15.6m to build and will cost £48.9m over 25 years; Forres, Woodside and Tain Health Centres, which have a capital cost of £13.6m and a lifetime cost of £43.9m; Inverness College which cost £45m to build and involves £137.2m of running costs over 25 years and Alford Academy, which has a capital cost of £18.4m, with unitary charges totalling £62.5m.

Mark Hellowell, senior lecturer in social policy at Edinburgh University, said: “The SNP government has been reasonably enthusiastic about using PFI, albeit not on an ideological basis but on a very practical basis – there isn’t really a plan B because of the constitutional settlement, and also because governments everywhere have limited capacity to borrow in the current financial environment.”

A spokesman for the SNP said the PFI contracts signed on Labour's watch were “incredibly bad deals”.

He said: “The SNP introduced our Non-Profit Distributing model, which eliminates the uncapped profits associated with the traditional PFI model and limits returns to a reasonable rate. Labour should stop trying to wash their hands of this and face up to the multi-billion pound legacy of debt they have left."

A spokesman for Scottish Labour said the issues which has emerged around the Edinburgh schools was a “construction problem, not a contract problem.”

He added: “Of course there's always debate about using private finance for public projects. It's odd that Nicola Sturgeon is talking in party political terms about this given that she promised to end PFI but continues to use it to this very day."