Jeremy Corbyn’s Labour Party needs to have an urgent debate about how to resolve billions of pounds of New Labour’s Private Finance Initiative (PFI) debts, according to a leading PFI research expert.
PFI was conjured up by John Major’s Government but deployed by New Labour on a grand scale.
Overcharging on PFI projects has meant the British taxpayer has given away billions of pounds to the Private Sector that the government itself could have borrowed for far cheaper by issuing its own bonds.
“We cannot continue to expose the flaws in PFI, have a review and do nothing. More radical action is essential for which there is wide public support. The public cost of PFI buyouts, bailouts and terminations plus the extra cost of private finance and higher PFI transaction costs is £28bn – enough to build 1,520 new secondary schools for two million pupils.” says Dexter Whitfield of the European Services Strategy Unit.
PFI has allowed successive governments to pay for schools, hospitals, motorways and various military and government buildings without the borrowing showing up in the the government’s annual spending.
The borrowing is hidden off balance sheet so the government is able to look as though it is building projects for much cheaper than the real cost of the project — in other words PFI is based on accounting tricks.
However no major politician, including John McDonnell or Jeremy Corbyn, talks seriously about investigating, prosecuting or jailing PFI fraudsters — let alone recovering the proceeds of crime.
I asked Jeremy Corbyn and John McDonnell’s office to contribute to this piece but I have been told to wait till later in the campaign for their PFI policy.
Last week Jonathan Owen wrote the following piece on the exorbitant cost of PFI schools for the Times Educational Supplement (possibly paywalled):
Here is the shorter form article (not paywalled):
Neither piece names the firms who have been getting rich by overcharging the taxpayer.
However Jonathan Owen hasn’t always been shy about naming greedy PFI contractors (this from 2015) :
Exclusive: Treasury data analysis unearths the 'enormous financial disaster' of Private Finance Initiatives
But no names were mentioned in 2016 either:
One in five PFI assets will remain in private, rather than public, ownership even after the contracts have ended
Interserve strikes Back
Interserve are one of the profiteering PFI firms — it was announced today that they’ve just won contracts to build more schools in Leeds and South Wales.
Interserve Healthcare Services
Interserve were also heading the consortium to take over Cancer services in Stoke:
But that appears to have just fallen through:
Dexter Whitfield – PFI researcher and expert – made the following statement:
The TES article on the operational costs of PFI school contracts again highlight the financial scams employed by PFI contractors to maximise their profits at the expense of education and healthcare.But it also exposes the fundamental structural and financial flaws in PFI projects which have become an albatross for schools and hospitals – high debt burden, offshore profiteering and weak accountability. Interserve’s new PFI schools contract in Wales illustrates how PFI rolls on unabated.We cannot continue to expose the flaws in PFI, have a review and do nothing. More radical action is essential for which there is wide public support. The public cost of PFI buyouts, bailouts and terminations plus the extra cost of private finance and higher PFI transaction costs is £28bn – enough to build 1,520 new secondary schools for two million pupils(1).I strongly recommend the People v Barts PFI campaign proposal to nationalise the Special Purpose companies that build and operate PFI projects be supported and developed by the Labour Party (2).(1) http://www.european-services-strategy.org.uk/publications/essu-research-reports/pfippp-buyouts-bailouts-terminations-and-major/pfi-ppp-buyouts-bailouts-and-terminations.pdf