PFI – A disaster waiting to happen

Gordon ‘Prudence’ Brown convinced himself that the City loved him because he kept Government debt to less than 40% of GDP. If they did love him – and he desperately wanted to be loved – it was because the City made oodles of money with him as Chancellor, and later as Prime Minister. And the Private Finance Initiative (PFI) was a nice little earner.

To keep Government debt low, Brown used PFI to fund the building of hospitals, schools and infrastructure. If the Government had borrowed the money at a cheaper rate (and Governments can always borrow cheaper than the private sector) it would have increased Government debt. PFI was a dodge to keep the borrowings – as they say in the trade – off the balance sheet.

The downside of PFI, of course, was the cost. Not only did the private sector borrow at a higher rate, but they wanted a profit – a large profit – and they saw PFI as a licence to print money. Generally, the government, hospital and school employees tasked with negotiating the PFI contracts were no match for the expensive lawyers and accountants representing the financial vultures. If they were any good, then the odds were that they would get an offer they couldn’t refuse, to work for the PFI companies.

In principle, PFI means that the private sector puts up the finance for new hospitals, schools, roads etc., provides for their maintenance, and 30 years later, this mortgage will have been paid off by the relevant institution at high rates of interest. (Even if the bubble economy hadn’t crashed, it’s doubtful that the hospitals and schools could have carried on making the annual payments.)

With the advent of austerity and the increasing privatisation of the NHS, the disaster is happening even faster than expected. Privatisation means administrative costs rise, as does private profit, and the only hope they have of making the exorbitant payments is by reducing frontline services, i.e. closing wards, reducing medical staff. Hospitals such as Lewisham face closure (Although Lewisham has no PFI, two other hospitals in the Trust do, and the PFI financial leeches have to be paid, even if the only way is by closing another hospital.) The lunatics have taken over the asylum and it’s time this insanity was stopped!!

The problem is that there appears to be no political will to stop this insanity, and unilaterally cancel these one-sided PFI contracts. So it’s left to the 99% to protect the infrastructure that is the lifeblood and heartbeat of our communities. Without properly functioning hospitals, schools and transport, we’ll be facing a bleaker, poorer, disease-ridden age. The elite 1%, made up of politicians, bankers, financiers etc. may think that their wealth, private medical insurance and public schools will insulate them from these ravages of disease, but disease is no respecter of wealth. In the mid-19th century, cholera struck down everyone until sewers were built in the industrial towns. It is a lesson today’s elite would do well to remember.

Michael Gold,

michael@radicalsoapbox.com

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