EVERY year the Labour government is handing over £40bn to the consortia of financiers, property developers and construction giants in payments for Private Finance Initiative (PFI) deals.
In the 1990s, these capitalist speculators got the willing leaderships of both the Tory and Labour parties to adopt the PFI to build essential infrastructure, like roads, bridges, hospitals, schools, fire stations and prisons.
With an eye on the fact that about 40 per cent of the country’s economic activity is conducted through the public sector, the financial parasites of the City of London championed PFI because they wanted to get their hands on the billions that pass through the Treasury and for the state to guarantee their profits.
The PFI contracts run for 30 years, or more, and the service contracts have led to hundreds of thousands of public sector workers in education and the National Health Service finding themselves employed by huge private corporations.
In addition, the PFI speculators are continually renegotiating their contracts to boost profits.
According to a report just published by the National Audit Office (NAO), in 2006 these business groups extracted an extra £180m in additional payments to their existing contracts, most of this money (90 per cent) going in pay-outs of over £100,000.
On some occasions the existing PFI consortia were given huge additional payments – £22.9m was handed over for an extension to Hexham General Hospital and the contractor at HM Prison Altcourse got £25m.
The NAO report said that public authorities were typically getting ‘poor value for money’.
On average the PFI companies charged an extra 10 per cent for ‘management’ on top of the cost of services they had purchased from subcontractors.
Some PFI schemes are so prescriptive that making essential changes to running services is almost impossible. Croydon Council has found that it cannot run more trams on south London’s Tramlink, or change the timetable, without renegotiating the PFI contract and incurring an additional bill.
The NAO gave details of the extortionate prices charged by PFI companies for simple maintenance work, comparing the highest and lowest charges.
The PFI company at the Royal Blackburn Hospital charged £486.54 to change a lock, compared with a charge of £30.81 at the Calderdale Royal Hospital in Halifax.
The company operating in the schools in the Wirral charged £302.30 to fit an electric socket, compared with a charge of £15.09 in schools in Kirklees.
Dave Prentis, General Secretary of UNISON, the largest public service workers’ union, said: ‘This latest National Audit Office report reveals how companies continue to rake in cash by charging unjustifiably high fees for making changes to contracts.’
However, rather than proposing that the PFI schemes be scrapped and nationalised, Prentis pleaded with Prime Minister Gordon Brown’s government to ‘tackle the obscene profits being made by these private companies at the public’s expense’.
This highlights the main problem. The union leaders have consistently refused to fight to stop the PFI.
In the beginning, under the Tories, the leaders of unions like UNISON, the GMB and T&G (Unite) declared that they opposed the PFI ‘in principle’, but refused to organise strike action to halt it and then negotiated deals with new PFI employers.
As Labour expanded the field of operation of PFI, the union leaders’ response was even more muted. As we can see from Prentis’ statement yesterday, the union leaders no longer call for the PFI to be scrapped.
Yet that is the only answer to the rip-off being perpetrated through the PFI on taxpayers, public sector workers and the millions who rely on these vital services.
Workers in the public services must demand their unions get the whole trade union movement to organise mass strike action to put an end to the PFI and defeat the sponsor of these privateers, the Labour government.
The Brown regime must be replaced with a workers’ government that will nationalise the PFI consortia, without compensation, and develop education, the NHS, etc. as integrated public services.