Empty Promises from the Prince of Darkness
George Osborne has promised a “fundamental reassessment” of PFI last month– it’s the news everyone wanted to hear. With the weight of evidence against the value, efficiency and transparency of the hare-brained scheme, the only question is: what took you so damn long?
But there must be serious doubts about George’s claims. In his speech Osborne said: “We have consistently voiced concerns about the misuse of PFI in the past and we have already taken steps to reduce costs and improve transparency.”
What steps are those? In his first year in office George Osborne signed off PFI projects with a capital value of £6.9 billion. Yet the taxpayer will pay £33 billion for these projects over their full life cycle, nearly five times the infrastructure’s value. Scandalous right?
But the truth is that’s business as usual for PFI. The ratio between PFI project value and total debt is now well known to be around 1:4. Excluding Osborne’s splurge the UK owes £267 billion for £64 billion’s worth of infrastructure on the 800+ projects signed since 1992.
So, if PFI is done, what does the future hold for UK public services? Can we expect a return to affordable, transparent and flexible construction of public infrastructure?
Osborne’s alternative to PFI won’t be announced for a while but we know what to expect. His destructive approach to our economic problems is as flawed as it is predictable: more privatisation.
This week Osborne said he was looking for “a new delivery model which draws on private-sector innovation, but at a lower cost to the taxpayer and with better value for public services”.
Does anyone believe him? In 1992 PFI ran on the same rhetorical ticket – private sector, innovation, efficiency, tax payer savings, value blah blah blah.
Dexter Whitfield, of the European Strategy Services Unit made an astute point on Osborne’s proposals. He said that until the private sector start complaining about PFI, we know they’re continuing to get a good deal. Right now the silence is deafening.
Whitfield said: “Everyone’s making a noise right now about PFI except one party: the private companies making the money. We know Osborne’s plans can’t be that radical or else you’d have David Metter [CEO of PFI company InnisFree] jumping up and down about it”.
Commenting on the news, Dr Eoin Clarke shared a piece of corporate logic on outsourcing that Coca-Cola use to drive down costs:
“’If someone is willing to carry out that work on your behalf for a sum of money, it is because they believe they can make money from it, in which case why aren’t you doing it yourself’.
He continues: “Out-sourcing, sub-contracting, private financing is a false promise. You relinquish control over the expenditure, yet retain liability for the costs.”
Privatising public services is a sham. If Osborne delivered real value for money, business would not be interested in taking the work on. No corporation cares about the public, its needs, quality of service or anything else, unless they are a means to every corporations’ end: profit.