Clever stuff on PFI

The current edition of Private Eye (No 1229) makes a couple of  good points about the Private Finance Initiative.

Firstly, the labyrinthine processes necessary to tee up any project will inevitably slow down any economy-boosting investments to the point where they are too late to be fully effective.

Secondly, even the pretense that the private sector was shouldering some of the risk is unsustainable; with the government now explicitly underwriting the banks that provide the finance.

So what we are left with is a plan worthy of Baldrick at his cunning best whereby middlemen take a fat cut of public funds in return for making slowing developments down and making them more expensive.  Clever stuff!

The real driver behind PFI is, of course, New Labour’s desire to fiddle the books.  In the short term it can look like a winner if no-one notices (and by and large they don’t!) but in the longer term it comes back to bite you on the bum.   It is straight from the same stable of delusional finance that the banks have been living in for the last few years.

I have always been viscerely opposed to PFI, not because of any ideological opposition to public-private partnerships per se, but simply because it is a crazy idea – guaranteed to increase costs and complexity (the two usually go together).  Has no-one in government heard of the KISS principle (Keep It Simple, Stupid)?

Whatever savings may be found will almost certainly be more than offset by the high cost of financing (a big cost for capital projects even in ‘normal’ times) and the inflexible lawyer-defined relationships that result. 

If there is a case for improveing project management when building schools and hospitals etc. (and I am inclined to think there is), then address this issue directly and don’t imagine that involving private sector players with very different motives will somehow – magically – solve the problem.  The really serious problems more usually arise from the government’s habit of being a bad client – for instance by chopping and changing specifications in mid project.  PFI does not help with this – indeed it can only make it worse.

 But the biggest problem of all with PFI may be that in embracing it the state sets itself up as a honeypot.  Many of the most successful and fastest growing UK companies of the last decade have been those that set themselves up to exploit this growing market which depends on old-school-tie networks, on revolving doors and secret deals. 

As George Monbiot argues in Captive State: The Corporate Takeover of Britain, what PFI actually means is virtually no democratic control or accountability (under the convenient guise of  “commercial confidence”).   Moreover, cost savings are illusory – financing costs are through the roof and FPI hospitals typically have substantially few beds than the ones they replace.  His account of the Skye Bridge PFI debacle is one of the scariest things I have ever read.

It was always a bit of a mystery to me why, judging by the Party’s relatively low profile on PFI, other Lib Dems did not apparently feel as I did about  it.  Could I be so far from the mainstream?   Then I stumbled across Vince Cable’s call for views on PFI dating from July 2007.   Some trolls of course, some not sure, but plenty of contributors who see PFI very much as I do.

Lets kill PFI off now before it does even more damage.


One response to this post.

  1. PFI is sleight of hand in so many ways – we should be honest enough to scrap it.


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