The previous UK government came up with a crack pot plan to keep increased public deficits off the books by dressing them up as PFI schemes, which were by and large ruinously expensive for the taxpayer in the long run.
When the "credit crunch" hit, the Business Secretary in dying days of the previous government seriously suggested that the government give PFI companies loan subsidies. In other words, having set up these schemes in order to shift borrowing off-balance sheet (and to enrich their mates), the government would now run up more off-balance sheet liabilities in order to keep the true level of these companies' expenses out of the companies' own books etc ad infinitum.
You might think that the Tories, then in opposition and now in government, would have made hay out of this. Nope. It's more of the same. Bob E has read between the lines of the article for us:
Today, the rationale behind another of the schemes the Grand Alliance is about to unveil is..
The government claims its ability to borrow at interest rates under 2%, much lower than commercial lending, or many other national governments, will allow it to launch the schemes.
and what is this scheme designed to do?
a temporary lending programme, where developers can borrow money directly from government departments to enable partly-funded projects such as housing, hospitals or new schools to go ahead, and loan guarantees for British exporters.
and anyone with a modicum of intelligence might think that if the government admits today it can borrow more cheaply than anyone else, surely that just blows out of the water the oh so clever formula they use to prove that a PFI project is justified on the grounds that there is no cheaper way of getting it financed than effectively paying the private sector doorstep lending rates on the never never... and so PFI continues, because the government can't afford any more borrowing, yada yada yada, and yet at the same time, they can arrange to make cheap loans to the private sector because they can borrow so cheaply...
We don't need no stinkin' objectivity
1 hour ago
12 comments:
There is an argument for PFI beyond smoke-n-mirrors around the never-never. However, it's one that's never made by the government or by the private sector, for relatively obvious reasons.
London Underground or Lambeth Council can't bash the fuck out of their workforce and make sure that train guards (which is what drivers effectively are on half the LU lines and will be on most of them in a few years) and bin men get paid the same as not-very-skilled private sector workers. Serco or Veola, on the other hand, totally can.
That's the actual cost-saving occurring in most private sector new-build schemes: everyone is getting paid far less than they would if you were to set up any plausible public sector new-build scheme.
On the other hand, it only works for as long as most people don't notice that it's the case.
Off topic but some good stuff from the LSE:
http://www2.lse.ac.uk/researchAndExpertise/researchHighlights/Economy/Predicting-property-booms-from-station-to-station.aspx
I think it's arrogance: the pols either don't think we will notice or don't care if we do. It's like Dave C condemning tax avoidance only when the avoider is not a Tory Party donor.
It feels like corruption to me. Maybe not bung-type corruption, but it certainly smells.
JB, maybe, but let's take your two examples.
Train drivers, as ably led by non-Homer-Owner-Ist Bob Crowe, know that it's ultimately the taxpayer who pays their wages and that they can easily hold the whole of London to ransom, so the wage-cutting didn't work there.
Refuse collection is one of the shining examples of outsourcing which actually works well, the cost per household is £100 a year or something and I don't think that dustbin men are particularly badly paid or that profit margins are particularly high.
RA, ta, I'll have a look.
B, I think you're right, they gamble that we won't notice. Even the current lot were keen to explain away why that south London NHS trust is so skint.
AKH, I suppose the ultimate corruption is when you can get the law changed to make what you are doing legal.
You might think that the Tories, then in opposition and now in government, would have made hay out of this. Nope. It's more of the same. Bob E has read between the lines of the article for us:
And there is all one needs to know about the differences between the Big 3.
> That's the actual cost-saving occurring in most private sector new-build schemes: everyone is getting paid far less than they would if you were to set up any plausible public sector new-build scheme.
Seems a VERY strong argument.
"Seems a VERY strong argument."
If it were the case. AFAICS, it doesn't matter who the client is, the same contractors actually get to do the building work. It's an argument for outsourcing of current spending, not capital spending, which is what PFI is about.
JH, the Big 3 are all exactly the same, it's just their rhetoric which is different (Indian Bicycle Marketing).
SB, it's not an argument unless the facts support it. Which they don't.
B, exactly. When the government or the council wanted roads or power stations or houses to be built, they always paid sub-contractors to do it. So there's no reason to assume that things get cheaper when they sub-contract the sub-contracting to a PFI company.
Mark: train drivers on the state-owned-and-operated Tube get gbp40k or thereabouts. Train captains on the Serco-operated DLR get under gbp20k. That's only workable because the DLR doesn't fall within the LU organisation and its existing wage deals. Hence, it makes sense for new infrastructure to be delivered in the same way.
"Hence, it makes sense for new infrastructure to be delivered in the same way."
No, it doesn't, because the staffing costs at client level are very small: all the design, contract management, cost control, H&S etc is contracted out to conslutants or contractors, whether the client is a PFI organisation or an public sector organisation. Moreover, they are probably the same conslutants and contractors in each case. You are comparing this with an organisation where the majority of the staff are directly employed
JB, probably true. I'd assume it's because the DLR drivers can't hold London to ransom in the same way as Tube drivers, they're not organised enough and a DLR strike would only be a nuisance for a fraction of commuters.
B, I agree, when you say "infracstructure" I'd also take it to mean a road or a bridge or something, which doesn't need much in the way of staffing once it's been built.
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