PFI – catastrophic waste of money!

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‘THE game is up for PFI, it is a catastrophic waste of taxpayers’ money,’ the GMB union said yesterday responding to the National Audit Office (NAO) which showed that Private Finance Initiative (PFI) projects will cost the public as much as £200 billion by the year 2045.

The collapse of Carillion, which was working on numerous PFI projects, has underlined the terrible consequences of such schemes. The NAO report found 716 public projects were active under PFI with annual costs amounting to £10.3bn in 2016/17. PFI projects will cost the taxpayer a further £199bn by the 2040s, it said.

Dr Chaand Nagpaul, BMA council chair, said yesterday: ‘As we saw with the collapse of Carillion this week, there is often little or no safety net for when these deals go wrong. It can cause huge disruption to patient services, and taxpayers are unfairly expected to foot the bill.

‘With the cost of financing hospitals 70 per cent more under PFI than if they were financed through government borrowing, it is clear that the government needs to move away from PFI deals and should be properly funding new NHS capital projects to ensure that public money remains in the NHS to deliver patient care.’

These PFI projects, used to build new hospitals, schools and roads are fleecing the taxpayer tens of billions of pounds every single year. PFI schemes were first introduced by the Tory government and then vastly expanded by the New Labour government of Tony Blair and then Brown.

The way that PFI schemes work is like this: Private companies are contracted to build a new hospital. Once built, the NHS then rents the building back from the private company at a rate of millions of pounds per floor, per year plus interest for the next thirty years. At the end of the thirty years the building does not belong to the NHS, it belongs to the private company!

It’s like buying your home and then becoming a tenant paying rent for thirty years at which point you could be evicted. The report suggests a group of schools cost 40% more to build and a hospital 70% more to construct than if they were financed by government borrowing. The Royal London hospital will cost the NHS £7 billion over 30 years when it cost £1 billion to build.

Examples are listed in the NAO report of what Labour leader Jeremy Corbyn called at PM’s Questions on Wednesday a ‘costly racket of private sector firms running public services’. One example highlighting the extent to which PFI projects are such an unbelievable waste of money is the case of Parklands High School.

Liverpool City Council is paying more than £4m each year for Parklands High School which stands empty and unused. It is now dubbed a ‘ghost school’ by locals. The school cost an estimated £24 million to build and, between now and the end of the contract in 2028, will incur a bill of £47 million, which includes interest, debt and facilities management payments.

The NAO showed that with the increased cost of borrowing, which is now up to 3.75%, paying off a debt of £100m over 30 years with interest will mean an extraordinary £73m in interest. This calculation is done with the interest rate remaining at 3.75%. Of course, if interest rates rise, the interest will be even more.

Unison general secretary Dave Prentis said: ‘The NAO report is a scathing indictment of all that is wrong with PFI. Millions of pounds of public money has been wasted that could have been spent improving public services.’

Dave Wiltshire, secretary of the All Trade Unions Alliance said: ‘The situation is obvious – while workers have endured over 10 years of wage cuts, the robber banks have made billions out of the PFI. What we need is a workers government and a socialist revolution that will finance the NHS by expropriating the biggest robbers under capitalism, the big banks and the big finance companies!’