I created this as a new start. I make no promises to update it at any regimented rate, a mistake which could have spelled disaster, I would have missed one deadline then just given up on the idea: much safer this way.
I also do not promise to keep the number of semicolons down, I realise I use them far too often, but y'know; it's my bloody blog.
Anyway, on with the show.
For my first blog, I thought I'd post about a political issue. It's hardly a snappy one to write about, no flashy fireworks here to start off my blog in style and get the readers in, but it is an issue I care about. This blog is primarily for my own amusement, so in a rather induction way, because I care about what I care about, I'm going to write about it.
What is PFI? The Private Finance Initiative (in Britain) was set up under Thatcher's rule and is still going today. It is a government scheme to allow and encourage private businesses to do expensive bits of the governments work such as building schools, hospitals and motorways but to delay most of the payback until a later time, typically small payments made over 20-30 years and at the cost of high interest rates on the governments part.
This rate of interest is very high. For instance the Edinburgh Infirmary hospital would have cost the government £180 million straight up to build. However, they chose to use the PFI; costing them only £30 million a year, but for 30 years. That's a markup of £720 million at our expense.
The good news for the government on these schemes, is that they do not have to declare the debt to these companies under this scheme as public debt. This means that they can neatly sweep these money problems under the rug when it comes to saying how well they are keeping up the economy if anyone ever challenges a parties economic policy.
The other main reason the controlling party wants to use the PFI, is that while the debt of paying for a new public building or service would normally come out of their own budget, they can put the debt into the future. When you could only be around for the next 4 or 5 years, this could be an attractive prospect. Ah short term viewing. One generation can get a free ride while piling on the debt for the children.
There are plenty of examples of PFI in use, but it seems pointless for me to list them all here; I would just be copying the stats over from over from other blogs and newspaper columns. But they are all quite similar in style, such as the three planned hospitals on the Paddington Basin. They would have cost £380 million, but with the PFI they are nearly £900. Overall, on 12 hospital schemes, the value for money for the government was only 58%.
The schemes are also critised for the amount of control these companies have over the supposedly socialist healthcare and education buildings. I'll leave this point out for the most part though, because I know there are a handful of you Anarcho-Capitalists out there reading this. I will mention one example though, since it is a Worcester thing. The Worcestershire Royal Hospital is in £15 million debt and only opened in March 2002. But because it was set up under a PFI with a company called Catalyst, it is subject to financial penalties for a range of issues at Catalyst's will. For instance, the hospital was fined £200,000 for having the bed occupancy rise by 90%. They got fined because they were treating more people. This sort of thing will go on until the hospital is fully owned by the taxpayer again.
Back in the early days of PFI it was heavily critised by the Labour government. Of course, this line of argument was quickly dropped so that the issue would become forgotten when Labour got into government and so could benefit from it too.
Of course, this sort of disregard for the future can't last forever. To quote Wikipedia, "As of October 2007 the total capital value of PFI contracts signed throughout the UK was £68bn. However, this figure pales into insignificance compared with the commitment of central and local government to pay a further £267bn over the lifetime of these contracts." The healthcare system is struggling under the repayments, they will peak at £10 billion in 2017, so it is set to get worse. If the government spending on healthcare falls, the hospitals may become insolvent.
Another critisism of the PFI is that what the government originally wants for a project, is changed for what corporations will want to pay for. As one piece in the Guardian put it: "this is how the £30m public scheme to refurbish Coventry's two hospitals became a £410m private scheme to knock them both down and rebuild one of them – containing fewer beds and fewer doctors and nurses. The old scheme was too cheap to attract private money."
I first heard about PFI back in the days of the MP expenses scandal. From a quick snoop around the internet, it seems to be accepted that while the MP expenses caused an outrage, they cost the country only around 11 million. The PFI scandal on the other hand, while costing us over a thousand times that and being every bit as corrupt, goes unchallenged. This is the most scary thing about the whole story, nobody cares. This is a complicated issue, so it won't sell papers like the MP expenses. 15 years on the government is every bit as happy to buy into this initiative, a scheme which is outrageously exploiting our economy.
The other main reason the controlling party wants to use the PFI, is that while the debt of paying for a new public building or service would normally come out of their own budget, they can put the debt into the future. When you could only be around for the next 4 or 5 years, this could be an attractive prospect. Ah short term viewing. One generation can get a free ride while piling on the debt for the children.
There are plenty of examples of PFI in use, but it seems pointless for me to list them all here; I would just be copying the stats over from over from other blogs and newspaper columns. But they are all quite similar in style, such as the three planned hospitals on the Paddington Basin. They would have cost £380 million, but with the PFI they are nearly £900. Overall, on 12 hospital schemes, the value for money for the government was only 58%.
The schemes are also critised for the amount of control these companies have over the supposedly socialist healthcare and education buildings. I'll leave this point out for the most part though, because I know there are a handful of you Anarcho-Capitalists out there reading this. I will mention one example though, since it is a Worcester thing. The Worcestershire Royal Hospital is in £15 million debt and only opened in March 2002. But because it was set up under a PFI with a company called Catalyst, it is subject to financial penalties for a range of issues at Catalyst's will. For instance, the hospital was fined £200,000 for having the bed occupancy rise by 90%. They got fined because they were treating more people. This sort of thing will go on until the hospital is fully owned by the taxpayer again.
Back in the early days of PFI it was heavily critised by the Labour government. Of course, this line of argument was quickly dropped so that the issue would become forgotten when Labour got into government and so could benefit from it too.
Of course, this sort of disregard for the future can't last forever. To quote Wikipedia, "As of October 2007 the total capital value of PFI contracts signed throughout the UK was £68bn. However, this figure pales into insignificance compared with the commitment of central and local government to pay a further £267bn over the lifetime of these contracts." The healthcare system is struggling under the repayments, they will peak at £10 billion in 2017, so it is set to get worse. If the government spending on healthcare falls, the hospitals may become insolvent.
Another critisism of the PFI is that what the government originally wants for a project, is changed for what corporations will want to pay for. As one piece in the Guardian put it: "this is how the £30m public scheme to refurbish Coventry's two hospitals became a £410m private scheme to knock them both down and rebuild one of them – containing fewer beds and fewer doctors and nurses. The old scheme was too cheap to attract private money."
I first heard about PFI back in the days of the MP expenses scandal. From a quick snoop around the internet, it seems to be accepted that while the MP expenses caused an outrage, they cost the country only around 11 million. The PFI scandal on the other hand, while costing us over a thousand times that and being every bit as corrupt, goes unchallenged. This is the most scary thing about the whole story, nobody cares. This is a complicated issue, so it won't sell papers like the MP expenses. 15 years on the government is every bit as happy to buy into this initiative, a scheme which is outrageously exploiting our economy.
Great first blog - you've definitely picked a complicated issue to try and explain. Another reason why its not attracted much media attention is that all three of the big partys seem to support them.
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