Easy Money - Irresponsible Legacy

PFI now costs each UK household £13,000 a year, according to a report by the Intergenerational Foundation. PFI debt now stands at £239 billion, nearly 25% of the entire national deficit.

Despite this enormous figure PFI has only delivered a comparatively meagre £64 billion worth of infrastructure. Only one in four pounds spent under the scheme is invested in bricks and mortar.

The Intergenerational Foundation is a new charity, which provides “an analysis of politics through the prism of generation.” It addresses the concern that the UK is bankrupting its future generations by choosing policies that favour older generations. Such policies include the short-termist, buy now-pay later PFI scheme.

The report discusses the imbalance in “intergenerational equity” that PFI is creating. Under PFI a child born today will pay for a hospital which opened ten years ago. This seems unjust. Why should the resources of future generations be brought forward to bridge a funding gap that our generation is responsible for?

What right do politicians have to spend the public resources of a generation that is not old enough to vote and, in some cases, not even alive yet?

Margaret Hodge, chair of the public accounts committee, said: “It is not right for our generation to tie our children’s and grandchildren’s hands by saddling them with debts and service agreements thirty or forty years into the future.”

“What started as a means of bringing private-sector investment and management skills into the public sector has allowed private companies to make huge profits while leaving us with a mountain of debt – a debt that is now accepted as much higher than would have been incurred if more conventional forms of public sector financing had been used.”

Most of the report addresses criticisms frequently leveled at PFI – poor value for money, lack of risk transfer, off-balance sheet financing – which readers of this website will be aware of.

You can download a copy here.