New bogeyman?

I am glad you seem to have taken government propaganda regarding PFI hook
line and sinker..............guess someone has too!

k

 

No, and he seems to have buggered off. No sport, these days.

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This is not how the government has described PFI, they have never
referred to it as borrowing money, so would you like to explain which
exact bits of government propaganda you are referring to?

 

The overall cost of PFI is far greater than if the government had to
fund the services directly, but it gives the government the advantage
that it can keep the debt off its books at the present time, although
it may have to pay far larger sums over time. The government has been
hoping that it can divert public attention away from these facts,
which seems to largely have worked. It also hoped that the quality of
the services provided would not be diminished, which of course has not
been the case, moving the services into the private sector seems to
have added even more bureacracy due to the complexity of the contracts
and the number of companies involved, and people are starting to see
the results of this.

The overall cost to the government does not really matter, but the
fact that the debt does not get counted in the national defecit is
hugely politically valuable. When it does come time to start paying
the money back, the government will do what they have always done and
simply create more money, which they are able do limitlessly and
without effort.

 

How on earth can paying private companys ten times as much for running a
public service (badly), than it would have cost if remaining in public
ownership, be seen as "borrowing" money?

k

 

Because they would in the past have borrowed money in order to build
new schools, hospitals, tube lines etc, whereas under PFI they have
private companies pay for the investment costs and then the government
pays them a service charge to use the asset. This is in effect the
same as the interest the government would have to have paid on the
borrowed money under normal circumstances. Obviously this is worse
value for money in the long term, but it allows the government to keep
the "debt" off their books, so it is politically advantageous to them
in the short term.

 

Let's take a look at how PFI works in the "City Academy Project".

A junior minister from Dept of Education says to a businessman: "Why
don't you promise to spend £2 million setting up an Academy? You don't
actually *have* to pay the money, just *promise* it! We won't chase you
to stump up the cash for, I dunno, ages, -if ever! [There might also be
a peerage in it for you- nudge , nudge, win, wink].

You can choose what is taught, who to employ, the numbers of students
and their selection process. The government will pay all running
expenses (about 28 million pounds) and underwrite all your risks if
things go wrong (better keep the last bit to yourself- eh?). The land &
buildings will be transferred to you for you to do what you like with
them after the political noise has quietened down and people have
forgotten about these deals- nice little earners there for you in terms
of redevelopment values!

What's in it for us, the government? Oh, the usual twaddle about the
"Third Way", blending the public and private for the good of the country
and selling off the family silver. Oops! I didn't say the last one, did
I? What? Yes, I'd be delighted to become a non-executive Director of
your multinational when my political career comes to an end- probably in
less than a year's time."

You will! Oh! Jolly good! Tony and Cherie will be delighted! No,
don't send any cash directly to Downing Street A bit infra dig
don'tyerknow!"

 

It's a bit like these "pay nothing for the first 18 months" deals that
you get on sofas and such. Just bigger. Everyone gets what they want
now, and the government gets screwed for a load of money later, which
should give them a good excuse to raise taxes, cut benefits and
services, or do whatever they want later. Just goes to show that the
government can create and spend as much money as it wants, through
whatever convoluted kind of deals and schemes it likes to set up, PFI
and others, and yet if it doesn't want to spend money on something it
can easily win any argument with the ever-popular protest of "we can't
afford it".