The scam of PFIs

Posted: February 24, 2013 in Uncategorized
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In these times of ideological slash-and-burn nonsense, there are few bigger scams than the scam of Private Finance Initiatives, which are currently crippling some hospitals and police forces, making a mockery of their supposed purpose:

Has there ever been a more obvious case of baseless ideological crusading and short-termism in modern politics?

John Major’s government introduced the concept, presumably because it ticked the box of obsessive private intervention in public services, while also lending the illusion of lower public spending.

New Labour also seized on it, perhaps to better shield themselves against accusations of ‘tax-and-spend’ politics, but it really is staggeringly short-sighted. Essentially, it is an admittance of the need for public infrastructure, but shying away from adequate taxation to pay for it.

It’s been well reported that the tax burden on companies particularly is being lowered ever further, despite multinationals and corporations sitting on trillion of pounds doing nothing for the economy. However, the issue is not so much the tax level on companies, but rather the fact that the biggest multinationals can legally ‘opt out’ of their share of tax, meaning there is a regular shortfall in potential tax receipts which could be used as capital for building and infrastructure projects.

PFI is essentially using private money, which needs to be repaid with greater interest, to fund projects which tax revenues should cover with minimal borrowing, thereby shifting the short-term burden on the taxpayer to a long-term burden for projects already long completed.

The excuses trotted out, including by Gordon Brown, generally stop at ‘private sector is more efficient’. So you heard it here. We should have our tax money used to pay interest for long periods on projects long completed, or alternatively have hospitals, schools and police stations declared bankrupt, for the whims of a vague ideological fallacy.


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