Parliament’s Public Accounts Committee have issued a report which comes as close as they dare to damning the
Private Finance Initiative (PFI) approach used over the last decade or so to
fund public projects.
Parliament’s Public Accounts Committee have issued a report
(click here to read it) which comes as close as they dare to damning the
Private Finance Initiative (PFI) approach used over the last decade or so to
fund public projects.
New Labour was particularly fond of setting up PFI projects
despite warnings from trade unions and others that these schemes would a) end
up costing more b) provide huge profits for the firms involved – with many able
to get funding on the basis that the projects would be underwritten by the
state whatever problems might arise- and c) would present a crippling burden on
the public sector as the PFI bills keep flying in. Many public sector bodies,
especially those in the health sector, are now in deep trouble as the cost of
PFI projects have become overwhelming. Initial estimates of costs have nearly
always proved way too low (low enough to win the bid naturally) and have then
shot up as things got underway. The report notes that most PFI projects have
risen in cost by 6 – 7% since the start of the credit crunch crisis. Some PFI
projects have ended in total disaster with the taxpayer having to foot the bill
Now we have this new report from the all-party Public
Accounts Committee. Entitled ‘Lessons from PFI and other projects,’ what does
it have to say? Conclusions include:
“1.Although PFI has delivered many new public buildings and
services, it has been far too easy for the Government to use it as the only
form of financing available without clearly proving whether it is value for money.”
In others words – we’ve been ripped off!
“2. Tax revenue is being lost through the use of off-shore
arrangements by PFI investors and the effect has not been adequately assessed.
The Committee is concerned that the Treasury has no plans to address this
matter.” In other words these firms have been hiding in tax shelters to hoard even more money at our expense.
Tax avoidance is, the report states with usual British understatement, “not
uncommon.”
“3. The public
sector has insufficient information on the returns made by PFI investors and no
mechanism for sharing in gains when the investors sell their shares.” Insufficient? What a surprise. Gains?
Don’t worry; none of these will be coming our way. PFI schemes are designed for
firms to make huge profits funded by the state in return for over-priced
results which in turn often do not work. For example, the report notes that
over £1 billion pounds has been lost to private firms working just on the M25
widening PFI project.
“4.
Transparency on the full costs and benefits of PFI projects to both the
public and private sectors has been obscured by departments and investors
hiding behind commercial confidentiality.” Of course they have. No one involved
wants people to see what a scam PFI is – there is too much cash (for them) at
stake.
“5. The public
sector has failed to make best use of commercial skills.” What the hell does
this mean? It seems that the Committee – just to prove how balanced they are –
want to raise this old myth about business method being necessary to carry out
public projects. Well you won’t get any useful knowledge from the PFI suppliers
– just hints about how to rip people off. Hang on – isn’t that what all
capitalists do?
“6. The
Treasury must address the scope for greater efficiencies from PFI projects.”
What do they want here? Let the report continue: “Any savings on existing
contracts will be dependent on voluntary agreements by the private sector which
may involve service cuts.” More likely this will result in service cuts and no
savings for the public purse. These firms are not going to surrender their
profits just like that.
In its
own limited way, the Committee report has provided official confirmation of
what has become the biggest smash- and- grab raid ever carried out on public
services, prior to the current government’s austerity cuts that is. The report
concludes; “At present, PFI deals look better value for the private sector than
for the taxpayer.” Indeed! These PFI schemes should be terminated at once,
payments stopped and the running of these projects taken back into total public
ownership. The firms involved should be nationalised without compensation
(except on the unlikely basis of need only) and those involved in the setting
up and operation of these projects held to account for the way that operated
these scams. This would provide a damning presentation of how capitalism really
works and who really benefits from it.
