The Private Finance Initiative (PFI) was a Tory idea, which, in opposition, New Labour strongly opposed. But as soon as Labour came to power they fully embraced it and declared that PFI would become the means by which most of our new public infrastructure would be built. Everything from schools to hospitals to roads are now put under the PFI hammer.
Like some dodgy hire-purchase agreement, PFI allows the government to avoid paying up front for the cost of big building projects. Instead, private companies get to build and run the ‘assets’ and the taxpayer then has to buy back these services, usually over a 20-30 year period. But this isn’t like buying a house on a repayment mortgage, more like buying with one of those complicated endowment mortgages we were all encouraged to use back in the 80’s and 90’s.
The intention was introduce private sector discipline into public funded schools, hospitals and prisons etc. But as George Monbiot points out, “Far from introducing market disciplines, it has become an official license to fleece the taxpayer. Far from reducing the public sector borrowing requirement, PFI is, as the Accounting Standards Board has noted, simply an ‘an off-balance sheet fiddle’”.
Almost every leaked document suggests that it is a gigantic fraud perpetrated upon the taxpayer and if everyone knew what was really going it would be ditched. But with the Skye Bridge toll victory in mind George Monbiot said “This is great news for two reasons: first it shows that persistent protest can eventually win against impossible odds. Secondly it suggests that the Private Finance Initiative – the biggest financial fraud ever foisted on the British people – is beginning to fall apart.”
Whilst everyone can understand last years MP’s expenses scandal where a few million pounds were wasted and most of us get hot under the collar thinking about it; most people don’t understand PFI but the costs and debts for PFI are truly staggering and run to billions of pounds in waste.
In the coming days we’ll expand on this theme and offer some solutions.
The above is an abridged and updated construct from the following sources:
There’s also a very interesting piece in today’s Independent on Sunday: