GR War on PFI

Sep 19, 2011


Globalise Resistance will soon be announcing a public forum examining the money sapping scheme of PFI, which is costing the UK taxpayer hundreds of millions of pounds every year, and which escapes the attention of government cuts. From the forum we will be organising actions against corporations and government departments that are responsible for this huge drain on public money.

We have been conducting an investigation into, the Private Finance Initiative (aka Public Private Partnership).

Our campaign has two key objectives:

1. We want to see an end to the PPP/PFI initiative in its current manifestation.

2. We want all debt incurred under PFI written off as odious. Odious debt is a legal term that usually refers to a country’s national debt incurred while under a dictator, as defined below:

“Odious debt […] holds that debt should not be transferable to successor regimes if (a) it was incurred without the consent of the people and (b) was not for their benefit (Alexander N. Sack, 1927; Ernst Feilchenfeld, 1931).1”

Public knowledge and consultation over PFI has been inadequate and PFI contracts delegate the provision of public services to private companies who put profit before people. These debts were incurred without the consent of the people and there is little discernible benefit from them. The national debt incurred under PFI qualifies as odious and should be written off.

What is PFI?

PFI is a way of outsourcing the provision of public goods and services to the private sector. Typically, a PFI project is awarded via to a consortium of companies after a bidding process. A consortium is normally made up by different types of businesses because PFI contracts award several services at once. For instance, a PFI contract for a hospital might include the operation of a canteen service and building maintenance after construction was completed. In such cases, three separate companies would form a consortium to bid for the contract.

The capital for the project is sourced by the private companies and the government then pay an annual figure to the consortium, which includes interest, to pay off the project over time.

The scheme was introduced in 1992 by the Tories but it was New Labour who embraced it tenaciously. As the New Left Review observed: “Major reconnoitred much of the terrain; Blair and Brown led the offensive.” Following New Labour’s election, then Health minister Alan Milburn declared it was “PFI or bust” for public projects when there was limited capital available and this proved to be true. For instance, the Conservatives had set up just two PFI projects over five years within the NHS but by May ‘99 Labour had introduced 25.

Today, PFI is a principal way by which roads, hospitals, schools, IT systems and other public infrastructure is paid for. Public goods as diverse as school dinners, recycling and transport are also managed by the private sector on behalf of public authorities.  According to the Treasury, at least £267 billion has been ring-fenced to pay for around 800 PFI projects (already underway) over the next 50 years.

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