Another bad news day for Labour crooks

[karlos]

Taxpayer may have to pay £170bn for PFI schemes, says Treasury

David Hencke, Westminster correspondent
Tuesday November 27, 2007
The Guardian


The huge cost to the taxpayer of Labour's commitment to the private finance initiative since it came to power a decade ago is revealed by the Treasury in a report by MPs published today. It shows that Gordon Brown has committed future governments to pay back £170bn by 2032 to banks, investors and private entrepreneurs for more than 800 schemes for new hospitals, schools and prisons.
The figure was drawn from John Kingman, managing director of the Treasury's public service and growth directorate, by Conservative MP Richard Bacon, a member of the Commons public accounts committee. In a letter to the committee Kingman argued that in one sense the figure was "meaningless", and suggested it could be lower if presented in a different way, but even this revised figure came to £91bn.
Kingman said: "I am obviously uncomfortable providing the committee with a figure which is meaningless and I would not want the committee to be in any way misled about this. A more meaningful exercise would be to take the stream of future payments ... and to aggregate them as at present value. If one were to do this one would end up with total future payments under the PFI measured in today's money which aggregate to £91bn."
Bacon said yesterday: "This figure reveals for the first time the full cost of PFI under this government. Obviously when inflation and interest rates are taken into account, sums due to be paid in future years will be less than today. But officials cannot get away with the fact that this figure is the actual cash bill future governments will have to pay for the whole PFI programme."

The disclosure comes after a spate of criticisms of PFI schemes, from Norwich and Norfolk hospital which proved to be too small to meet demands, to consortiums making huge profits from refinancing PFI deals, the most notable being Fazakerly prison near Liverpool where a consortium got virtually all their money back by refinancing the scheme.

The MPs' report also warns that bids are becoming more uncompetitive, are taking longer to go ahead, and public officials are often incapable of challenging bidders when they put in for big increases, some as high as 26%. In the worst cases, public services are being cut back to pay interest charges. Examples include closing hospitals beds and cutting back porters at Darenth Valley hospital in Kent and dropping promised improvements at the Queen Elizabeth hospital in Greenwich, south-east London, to pay increased bills. Edward Leigh, chair of the public accounts committee, said: "The process by which PFI projects are tendered has not improved ... it has got worse. If the public sector is to get value for money ... then the market must be truly competitive. What we find instead is that a third of recent projects attracted only two viable bids.

"The average length of tendering time is now nearly three years. Schemes are thereby delayed and market interest weakened because the costs of making a bid are driven up. And the lack of PFI expertise among the public sector procurement teams is resulting in poor negotiating with bidders who often have the whip hand. PFI deals were supposed to give us certainty about the long-term costs of providing public services. The reality is different."

The MPs' concern was backed by the CBI, which generally supports PFI schemes. Neil Bentley, the CBI's director of public services, said: "In a survey of PFI contractors, the business lobby group found that changed orders, delays and added costs were common. In answer to a question as to what respondents' companies have experienced from the PFI, 69% said they had experienced changed specifications by the contracting authority before contracts were signed; 49% said they had experienced changed specifications by the contracting authority after contracts were been signed; 78% said they had experienced avoidable delays on the part of the procuring authority; and 76% said they had experienced higher than expected bid costs."

The acting Liberal Democrat leader and shadow chancellor, Vince Cable, said: "Time and again the government has proved itself woefully bad at putting PFI contracts out to tender.

"The government's record on dealing with big projects, such as those in HM Revenue and Customs and the undervaluation of QinetiQ, show that ministers just don't have the competence to get value for money in these negotiations."

Dont forget this article is copied directly from the pro Labour chip paper otherwise known as the Guardian. You can bet things are much worse in reality.

[Dogsmilk]

And who was it that first introduced PFI...?

[karlos]

[Dogsmilk]

*sigh*

It's not "my party". I wouldn't try to excuse anything they do. If you wish to believe I'm a "labour Zionist apologist" that's up to you and I really don't care.
However, all I am trying to point out is that PFI was originally a scheme cooked up by the Thatcher (who you inexplicably worship) government and subsequently adopted and expanded by Labour. Something you mysteriously failed to acknowledge in your reply.
PFI is a ludicrous scheme unless you happen to be a private sector corporation that will profit from it. As the entire world is sold to faceless corporations bit by bit, you castigate "Labour" but have bizarre nostalgia for "conservative", apparently unable to realise they are both servants of the same master.

[blackcat]

Karlos - PFI is like paying for your mortgage using a credit card at massively inflated interest. It was ALWAYS known to be so and was the case when the Tories brought it in. Blair being one of them was hardly going to change it. What is your problem in recognising that the "Labour" part is no such thing!!

[karlos]

I agree, but the Tories used to be financially very prudent and always used to get value for money.
Labour goes into these PFI schemes paying way above market rates and all the deals are done with overseas companies and front organisations.

I disagree with ALL PFIs
i cant see why the government or councils do not build and own schools, hospitals, colleges etc themselves.
Why pay rent and interest and management fees and consulting fees?

Let me give you an example - United Healthcare - a US company very closely linked with Bush is one firm that has made billions out of the NHS.
No tender, no scrutiny and paid way over market value.
Neil Bush and Boris Berezovsky own an education software firm.
They are making megabucks from the UK taxpayer too.

Labour are the absolute pants.
No ifs No Buts.