Monday, December 27, 2010

Wonder what the excuse will be at the next election?

PFI, private finance initiatives, supposedly the New Labour way of getting stuff done on the cheap with low payments over a length of time until they were payed off. My parents used to call it "doing it on the never, never."
Naturally it has come back to bite us, like most Labour schemes, at around about £15,000 per taxpayer, approximately 5 times what was said at the time.

EVERY working family in Britain faces an average total tax bill of nearly £15,000 for Labour’s botched public-sector investment schemes, an MP claimed last night.
New analysis of hundreds of Private Finance Initiative deals set up under the last Government showed repayments are likely to total five times more than previously thought.
The miscalculation arose because Labour ministers failed to assess the long-term costs of the privately-funded schemes.
Senior Tories now fear the ballooning expense of PFI deals may be the most damaging legacy of Gordon Brown’s years at the Treasury and in Downing Street.
Tory backbencher Jesse Norman, who wants PFI providers to give back some of their profits from public sector deals, analysed the expected total costs of the 544 PFI deals agreed under Labour.
He estimates the average repayment cost for every working family will reach £14,800. Labour estimated it would be just £3,100.
Mr Norman, MP for Hereford, said: “Under Gordon Brown, Labour went on a spending splurge with borrowed money which taxpayers’ will eventually have to pay back many times over.
“As a senior Treasury adviser working for Gordon Brown, Ed Miliband bears responsibility for a borrowing trick that will mean future generations saddled with billions in debt.” Private Finance Initiative deals were used by the last Government to secure money for dozens of schools, hospitals and other public sector buildings.
Oh utter joy, not only are we saddled with higher costs and rising prices, it seems there will be no future respite either. Anyone hoping that the Tories might get around to some sort of tax break will be whistling into the wind, any savings they make will have to be ploughed back into paying off Labours largesse for the next 25 to 30 years. Not that the Tories seem to be that interested in cutting back the state, slowing it down a little yes, but actually cutting it back? Well, not that I or any others can see.
To add insult to injury for the taxpayers...
Many PFI deals also oblige the public-sector managers of the buildings to use cleaning or maintenance services from PFI providers, often at a much higher cost.
Labour, wrecking the UK economy from its very beginnings proving once again socialists have no grasp of economics and seem to believe money grows on trees and will never run out.

4 annotations:

Trooper Thompson said...

PFI is a disaster for tax-payers, and was always clearly so. It is difficult to find a rational reason why the socialists did this to the country. I expect you are right, that it comes down to their utter lack of economic understanding, perhaps supplemented by brown envelopes stuffed with money.

John R said...

There's an old saying that if you borrow a pound it's your problem, but if you borrow a million pounds it's the banks problem.

Now these PFI companies have spent billions, not just mere millions, building hospitals, schools and other things for the state. They are now hoping that every year from now on the state will pay them ridiculously huge amounts of money in return. So who has the problem?

I know I have just entered the realms of fantasy, but if Mr Maude or Mr Pickles (for example) went to each of the PFI companies and said to them; stuff your contract we're not using your cleaners unless the cost comes down to '£x"; we're not paying you what you agreed with the monocular mentalist, instead we'll pay you '£y' and so on we could get the deals down to something reasonable.

Remember, if the state just pulls the plug all the PFI companies go bust. They might shout about legal action but it wont matter, they'll be bust, their shareholders will lose out, their managers will be on the street and totally bonus-less. So rather than lose everything a hard nosed renegotiation could put these deals back onto a sensible commercial footing.

But than BAe got away with their criminal carrier deal and no-one faced them down, I have no great hope of anything different happening over the latest rip off revelation.

English Pensioner said...

PFI s a disaster simply because the Civil Service, the various Local Authorities and the NHS do not have competent contract negotiators. As a result, they were taken for a ride with every contract. Many companies negotiate with others to provide buildings and facilities, or go for sale and lease back, but you can rest assured that they ensure that they don't pay a halfpenny more than they have to and all their contracts will have suitable break clauses. But not the government.

This problem of incompetent contracts negotiators doesn't only apply to PFI, it applies to most government contracts, look at their computer contracts and the shambles with MoD contracts.

One of the problems is that Civil Servants are obsessed with using the biggest companies, which they claim can be trusted to give a "fair price" and thus there is never any real competition. When I worked as an engineer for a government authority, I was refused permission to let a contract for a particular job with a small company where it would have cost about a quarter of that being charged by a major company. The stated reasons? "Its far to cheap so there must be a snag and the company could go broke before completion". The real reason - "If we go to the biggest company in the field and it goes wrong, we can't possibly be blamed and it won't affect our careers".
I had the last laugh - the selected company went broke and my preferred small company picked up the pieces!
Unfortunately, this doesn't happen often enough.

James Higham said...

It always was going to come back on us.