There’s a very interesting article in the business section of the Independent today referring to the fleecing of public money by PFI schemes. Jeremy Warner notes that history is repeating itself.
Thatcher’s privatisation essentially meant that public assets were sold off to the private sector at bargain prices, effectively ripping off the public purse. According to the House of Commons Public Accounts Committee, the same sort of thing is happening with PFI. The scale of PFI debt, running at well over £160bn according to the last budget if memory serves me correct, means that this is a scandal of unprecedented scale. These are not some sort of side government initiatives, PFI or PPP (Public Private Partnerships as they are called now) have been the central plank of Labour public service financing. It’s political significance is magnified by the fact that the architect of PFI is about to become Prime Minister.
Warner writes:
“In particular, the public sector is failing to share in the lucrative benefits that accrue when the debt is refinanced on better terms, or the equity is sold in the secondary market at bumper profit. This is despite the fact that the foundations on which these refinancing profits are built are the revenues supplied by the taxpayer.”
In other words as taxpayers we are being ripped off. Opponents of PFI from the start warned about the over generous returns for private firms from the public purse for their original investment. Now it turns out that whole schemes have been guilty of mismanagement and profiteering.
Now I readily accept that apart from the £16bn monster PFI deal in St Athan, we have seen very little PFI in Wales. However, this matter continues to be relevant to the Welsh taxpayer due to the centralised nature of the taxation system in the UK.
Over the years Brown has been accused of mortgaging the future of the UK by accumulating so much PFI debt. As a more learned colleague once informed me, with PFI, mortgaging the future is to kind a word as assets even after being repaid at vastly inflated costs continue to be privately owned. What Brown has done effectively is accumulate an astronomical amount of unsecured debt. He is the credit card kid of politics.
Thatcher’s privatisation essentially meant that public assets were sold off to the private sector at bargain prices, effectively ripping off the public purse. According to the House of Commons Public Accounts Committee, the same sort of thing is happening with PFI. The scale of PFI debt, running at well over £160bn according to the last budget if memory serves me correct, means that this is a scandal of unprecedented scale. These are not some sort of side government initiatives, PFI or PPP (Public Private Partnerships as they are called now) have been the central plank of Labour public service financing. It’s political significance is magnified by the fact that the architect of PFI is about to become Prime Minister.
Warner writes:
“In particular, the public sector is failing to share in the lucrative benefits that accrue when the debt is refinanced on better terms, or the equity is sold in the secondary market at bumper profit. This is despite the fact that the foundations on which these refinancing profits are built are the revenues supplied by the taxpayer.”
In other words as taxpayers we are being ripped off. Opponents of PFI from the start warned about the over generous returns for private firms from the public purse for their original investment. Now it turns out that whole schemes have been guilty of mismanagement and profiteering.
Now I readily accept that apart from the £16bn monster PFI deal in St Athan, we have seen very little PFI in Wales. However, this matter continues to be relevant to the Welsh taxpayer due to the centralised nature of the taxation system in the UK.
Over the years Brown has been accused of mortgaging the future of the UK by accumulating so much PFI debt. As a more learned colleague once informed me, with PFI, mortgaging the future is to kind a word as assets even after being repaid at vastly inflated costs continue to be privately owned. What Brown has done effectively is accumulate an astronomical amount of unsecured debt. He is the credit card kid of politics.
