{"id":4189,"date":"2018-01-22T06:57:19","date_gmt":"2018-01-22T06:57:19","guid":{"rendered":"http:\/\/imjussayin.com\/blog\/?p=4189"},"modified":"2018-01-22T07:01:48","modified_gmt":"2018-01-22T07:01:48","slug":"pfi-carillion-bust-and-walk-away-let-the-public-pay","status":"publish","type":"post","link":"https:\/\/imjussayin.com\/blog\/pfi-carillion-bust-and-walk-away-let-the-public-pay\/","title":{"rendered":"PFI Means Bust and Walk The Public Will Pay"},"content":{"rendered":"

\"PFI<\/a><\/p>\n

The Public pays for Private Finance Initiatives (PFI) with lives, taxes and income insecurity. So, while the Government point to Carillion’s Board of Directors, for its collapse<\/a> the Government is equally if not more culpable. \u00a0For 30 years Tories have been relentless in their message about the inefficiency of public managed services<\/a>.\u00a0 And the efficiency of private business. \u00a0So, governments have replaced many services with\u00a0large companies like Carillion under the guise of \u2018efficiency\u2019 and \u00a0\u2018cost-effectiveness\u2019. \u00a0And what those political principles have created is a welfare state for big business.\u00a0 They go bust and walk away, leaving the \u2018inefficient\u2019 public purse to pay.<\/p>\n

PFI Models<\/h2>\n

Reward for business after paying yourself a satisfactory salary is profit.\u00a0 Profit is the reward for taking a risk. Then there is PFI.\u00a0 That is where large private companies take services from the public sector, along with secure jobs.\u00a0 They borrow money to complete projects, at a far higher rate than if the government borrowed money.\u00a0 The government then pays the companies, that far higher rate.\u00a0 So, before, 1990 hospitals paid no charges on their lands or building now they are paying 15%. \u00a0However, the base rate for borrowing is 0.5%.<\/p>\n

And with PFI there is no risk. \u00a0When the business fails, and Carillion has not been alone<\/a>, the taxpayer foots the bill.<\/p>\n

The PFI \u00a0Costs<\/h2>\n

PFI\u00a0contracts are usually outsourced<\/a> and then outsourced again. So, Carillion’s collapse also means that their small subcontractors will have to bear losses. And that could include layoffs and financial write-offs, which will affect a firm’s balance sheet.<\/p>\n

Nor is Carillion’s failures a PFI anomaly as the government and private markets suggest. Balfour Beatty is Britain\u2019s largest construction firm. \u00a0It issued seven profit warnings in the space of two-and-a-half years. \u00a0East Coast Rail failed and was rescued by the public purse<\/a>, was sold and is again being rescued by the public purse<\/a>.<\/p>\n

The\u00a0National Audit Office has concluded that PFI is an expensive<\/a> method of funding. The cost of public projects can be 40% higher and does not necessarily bring any benefits.<\/p>\n

Carillion’s services have cost more than money. \u00a0Carillion ran an NHS clinic where<\/a> Anita Manis, one of three patients, died after a routine operation. \u00a0That is in addition to the potential failings in the cases of six patients who suffered irreversible sight loss after treatment. And at another hospital, their\u00a0food hygiene and standard of cleanliness was slammed<\/a>.<\/p>\n

And yet the process will not change.\u00a0 Theresa May says<\/a>\u00a0Public-private partnerships are essential!<\/p>\n

No To PFI<\/h2>\n

Major’s Tory government<\/a> invented the PFI. New Labour enthusiastically embraced it. \u00a0It is in all their interests to perpetuate the fraud that they are providing quality services and low spending.<\/p>\n

So PFI is a fraud. \u00a0And it is also wrong because it allows the government to pay profit to companies. But companies<\/u> should not\u00a0profit from public services\u00a0<\/a>which are a non-profit making natural monopoly. The private sector is all about the free market but the provision of government services are not a free market. That does not mean there is no place for the private sector to provide specialist services. \u00a0But not the delivery of school meals, guarding prisons and delivering finance for infrastructure.<\/p>\n

The government could stop using PFI contracts\u00a0but that would mean admitting the failure of their ideological policy. And\u00a0it may impact on what appears to be the Tory Party’s unhealthy relationship with big company donors<\/a>. \u00a0At the very least the government needs to stop propping up failing companies. \u00a0It supported Carillion even when the banks walked away. \u00a0The government could also\u00a0remove the limited liability that protects \u00a0Director’s assets. But the revolving door between business and politics will not allow that either.<\/p>\n

When PFI fails the cost is paid in human capital, taxpayer money and cuts to public services. \u00a0But the Director’s just walk away with their bonuses in the bank. \u00a0So we need to vote for a government with alternative ideas. \u00a0Otherwise, PFI will continue to bust and walk away and let the public pay.<\/p>\n

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