Wednesday, 27 May 2009

The real expenses scandal

I get the sense that if I ever met George Monbiot, I'd dislike him. He often comes over as ignorant and opinionated. He's angry a lot of the time too. But none of this makes him wrong. And in yesterday's Guardian he was spectacularly right about PFI.
PFI allows consortiums of banks, construction and service companies to build and run our public infrastructure. Though the government maintains that this offers better value than using public money, in reality the numbers behind all PFI projects are rigged. While the government retains much of the risk, the investors keep the profits, which often run to many times the value of the schemes.

The public liability incurred so far by the private finance initiative is £215bn...

One of the consistent features of PFI is that the projects are reverse-engineered to meet the demands of corporate investors. This, for example, 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.
We should all be incensed by this. Yes, MP's expenses are scandalous and symptomatic of a wider dishonesty. But if you want a case of public money being used for private gain, PFI is the biggest, most glaring example. How Gordon Brown ever got a reputation for prudence after promulgating PFI is beyond me. We should not let our anger at his other failings to distract ourselves from the failings of this rotten, shameful system. PFI encapsulates the worst of free market dogmatism without any compensating controls. There is no price discovery and little competition. Instead we have a simple transfer of public funds to private companies. PFI brings crony capitalism to the heart of public procurement, and anyone who cares that their taxes are spent efficiently should be vehmently opposed to it.



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