Statement of intent, and first rant: PFI

3 August 2008

Welcome to my new blog. My other blog, at paddybrown.co.uk, is where I serialise my webcomics, including my adaptation of the ancient Irish epic The Cattle Raid of Cooley, which starts on Wednesday. But there are other things I want to write about – particularly my political concerns – and to include them in the same blog as illustrated tales of Iron Age adventure would only confuse.

I would describe myself as a liberal, which may also cause some confusion. Most of the Anglophone web is American, and in America “liberal” seems to mean “free-spending authoritarian statist”. Here in the UK the stereotype of a liberal is someone well-meaning but a bit vague. My own stance is anti-authoritarian, pro civil liberties, due process and the freedom of the individual, but I’m not a US-style ideological libertarian: I’m in favour of collective provision of essential services where that does the job better than private provision.

For example, the UK’s National Health Service, by employing doctors on salaries rather than paying them fees per procedure, costs the taxpayer less than private health insurance costs the premium-payer in the US, delivers more reliable and universal healthcare, and doesn’t exclude the chronically ill as a bad risk. It’s not perfect, but it’s much better value for money, and I’d like to see something similar done for the legal system.

This is the sort of perspective I’ll be blogging from. My first post follows.

Everybody agrees, Gordon Brown is a disaster, and David Cameron looks a virtual certainty to be the next Prime Minister. As a lifelong liberal lefty who grew up under Thatcher, sang “Ding Dong the Witch is Dead” when she was deposed, and could never imagine myself voting Tory,1 I find myself actually looking forward to the prospect. Not out of any enthusiasm for Cameron and his lot – they look just like another bunch of smarmy shysters – but out of utter disgust with New Labour and their crimes.

The left promises to use the power of the state to improve society, protect the vulnerable and provide for the needy. The right promises to reduce the power of the state and let people live their lives without interference. In practice, both left and right use the power of the state to impose their will, line their pockets and featherbed their friends.

Strangely enough, many of the reasons the Labour Party deserves a decade or two out of power have nothing to do with why they’re going to get one. The Tories in general2 don’t actually oppose them on these issues, and will probably continue the same policies once they’re in power. The press don’t go after them either. We know about the Iraq War, and the deception of the public that accompanied it. We know about David Kelly’s death. We know that Blair used the power of the state to intimidate opposition in the aftermath.

What is more mysterious is why nobody but Private Eye is prepared to talk about PFI.

PFI. The “Private Finance Initiative”. Also known as PPP, or “Public-Private Partnerships”. That’s when the government pays private companies to deliver public services. It invariably costs the taxpayer more, delivers less, increases the risk of data loss and fraud, and makes a handful of favoured companies very rich.

As an example., hen New Labour came to power in 1997, Coventry’s Walsgrave Hospital needed renovating, and the work had been costed at about £30 million. Gordon Brown, then chancellor, was not prepared to pay it. Here’s what they did instead.

Both of Coventry’s Hospitals – the Walsgrave and the Coventry and Warwick – were demolished, and the land given to a private consortium. The consortium built a brand new hospital on the Walsgrave site, that would have 25% fewer beds and 20% fewer staff than the old hospitals. The government signed a contract to pay the consortium £36 million a year for 25 years so the NHS could use this hospital. At the end of the contract the hospital would remain the private property of the consortium. The former site of the Coventry and Warwick hospital was also their private property, to be developed as the consortium saw fit.

Think about that. To avoid paying £30 million in one go, at the end of which it would own two good hospitals, the government committed itself to paying £36 million every year for 25 years, plus the land those hospitals were built on for development, in exchange for less hospital, and after 25 years, no hospital. It paid someone to rip it off.

There are hundreds of these schemes. In Belfast, the government is committed to keep paying a private consortium for 20 years for a high school that, being situated in an area already well served withs schools ands with a falling birthrate, has no pupils. That deal also involved handing over land for development.

We all know how inefficient the public sector can be, and how much more efficient the private sector supposedly is, and yet PFI costs orders of magnitude more. Why does this happen? Why would anyone pay so over the odds for something they could easily get for a fraction of the price?

My brother is a logistician for Médecins Sans Frontières in Chad. He has previously worked for other NGOs in various countries. In one of these previous jobs, he discovered that the local staff had contracted a local firm to supply a certain commodity for more than the price they advertised it at. A little digging uncovered the unsurprising fact that the the NGO staff member and the supplier’s salesman who cooked up this deal were splitting the difference between them.

Does it follow that anyone who spends more of someone else’s money than they need to is pocketing the difference? Perhaps not. If it happens once or twice we might put it down to incompetent negotiation of the contracts. But this has been systematic. And Tony Blair is swimming in money now that he’s not Prime Minister any more. Even before Blair left office it was calculated that the Blairs’ could not have afforded to pay their monthly mortgage repayments on their official monthly income. David Blunkett, who as Home Secretary did so much to push through the Identity Cards scheme, is now a paid advisor to Entrust, a company that provides software for ID cards. We’ll see what other lucrative positions New Labour cabinet ministers find themselves in once they’re out of office and it’s safe to reveal them.

PFI is corrupt. It mortgages the taxpayer for decades to come, for the sake of projects that could have been run as public services for a fraction of the cost. And it makes the private companies that run the services, and the politicians that assign those services to them, wealthy. Newspapers who pretend that what’s starving public services of funds is “too many managers” or “civil service bureaucracy” are colluding in this corruption.

The last Tory government lost an election because a handful of its members were individually corrupt. New Labour is corrupt to the core. They need to go. In fact, they need to go to jail. But will the Tories stop it? What’s the emoticon for “laughs hollowly”?

  1. Living as I do in Northern Ireland, I don’t actually have the option of voting Tory, or Labour, or even bloody Liberal Democrat. I get the government I’m given. But the point is rhetorical.
  2. An honourable mention has to go to David Davies for his brave stance on civil liberties.
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5 Responses to “Statement of intent, and first rant: PFI”

  1. Sharon Says:

    Hi

    PFI is a terrible scheme that rips citizens off and should never have been started. It appears too that some of the projects paid for by PFI are white elephants. Where I used to work, we had to have a new building. It was a PFI thing, and the contractor screwed up the building, having no expertise for the super-specialised requirements of our work. They also got to build a load of houses on some very sought after land (west London, bordering a beautiful and huge park).

    I’m sort of glad I can’t vote Tory or Labour, it’d be a bit Sophie’s choice in reverse.

  2. paddybrown Says:

    It’s odd how these things always seem to involve land for development, isn’t it? Good to hear from you.

  3. Eric Leach Says:

    I live in a large UK town where in 2005 the Council signed a 25 year Street Lighting PFI. The PFI mandated the replacement of all the 14,000+ lights in the borough and a very high level of brightness (not required by international standards) for the new lanterns. Of course the PFI company is one of the main energy companies in the UK.

    Already some UK boroughs are trying to reduce their energy bills by turning 50% of their street lights off in the middle of the night. Some are experimenting with using low energy bulbs. Exactly what incentive would the PFI /Energy provider have to act with such prudence?

    To outsource any utility/public service for 25 years is at best completely barmy and at worst criminal.

  4. paddybrown Says:

    I quite agree Eric. For reasons outlined above, I tend to believe “criminal” rather than “barmy”. Somebody’s getting kickbacks.


  5. Normally I don’t learn article on blogs, but
    I would like to say that this write-up very compelled me to try and do it!
    Your writing style has been surprised me. Thanks, quite nice post.

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