How can anyone fail to see through PFI?
Sep. 30th, 2002 02:06 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
ciphergothHow can anyone think using private money to build hospitals and schools is a good idea? As far as I can see the reasons not to are screamingly obvious and pretty irrefutable - am i missing something?
If it's private, it's an investment. If it's an investment, they'll give money now in return for more money later. If they want more money later, it'll have to come from the taxpayer. Ergo, the total cost to the taxpayer in the long term is greater with PFI.
Is this not the bleeding obvious?
If it's private, it's an investment. If it's an investment, they'll give money now in return for more money later. If they want more money later, it'll have to come from the taxpayer. Ergo, the total cost to the taxpayer in the long term is greater with PFI.
Is this not the bleeding obvious?
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no subject
Date: 2002-09-30 06:21 am (UTC)no subject
Date: 2002-09-30 06:42 am (UTC)There was a guy on the radio who said something interesting last night. He was talking about how the private sector apparently claims to assume the risk (and the corresponding cut) but as was seen from Railtrack, the risk is still in the public sector in that if a hospital or school got into trouble there'd be no choice, politically, but jumping in and taking over. So the government pay for the risk twice.
There's a good article today in the paper by Kinnock. He seems to have his head screwed on. He's a bit coy about PFI and Iraq but, reading what he says, I dispair that he's not leader now.
no subject
Date: 2002-09-30 07:18 am (UTC)The point of the exercise is to get the things built while avoiding the financial crisis that has totalled most other Labour governments. The cost, as you say, is greater costs in the long run, but as that'll largely be paid under (and therefore blamed on) Tory governments, I suspect Gordon doesn't see that as being entirely his problem. Does that sound cynical? Does that sound cynical enough?
In theory, government borrowing would be better because governments, as you say, don't demand profits, and anyway governments get better terms and interest rates on their loans. Unfortunately, government debt is secure enough that banks can use it as collateral on their own finance and borrow against it, effectively increasing the amount of money in circulation unless interest rates go up (Bad Thing for employment).
The alternative would be to fund it immediately out of general taxation. The problem with this is that while the public say that they'd be happy to do this, the public are very possibly lying. The risk is that if this was tried, everyone would claim to think that it was a brilliant idea, and then most of us would go off and vote for the Tories instead. Tony and Gordon and everyone else in the party in the Eighties watched this happen in '82 and '87, and of course again in '92. Tony got elected leader because he was prepared to get the Tories out at any cost and keep them out by any means necessary. The public might accept a slow rise in personal taxation, if it's gradual enough that they don't notice. They almost certainly wouldn't accept one they would notice.
So there you go. Yes, I blame the government, but I also blame the electorate for putting them in the position where the wrong choice looks tempting.
no subject
Date: 2002-10-01 01:52 pm (UTC)If Tony really really wanted to keep the Tories out, we'd have PR by now.
Municipal Bonds
Date: 2002-10-02 10:12 am (UTC)The Economist put forward another interesting point. A new tube line could be partly off-set by wind-fall taxes for the areas it affects. This was psrtly the case for the Docklands line extension, but the amount contributed - and only by the Docklands Corp - was a pittance cf the cost of the extension. Business and private property all along the route should also have been charged wind-fall taxes, as they all had a nice, big benefit after it opened. Making the direct beneficiaries contribute more would hardly be politically unpopular either.
And more ...
Date: 2002-09-30 07:48 am (UTC)The way I was given it by a mid-level civil servant, who got it from an EDS manager, is that if a government department needs a computer system, and is given a choice between paying £100M now and £1M a year for ten years, or paying £20M a year for ten years, they will always pick the more expensive option because it still works out cheaper over the period of their tenure in office.
Re: And more ...
Date: 2002-09-30 08:21 am (UTC)no subject
Date: 2002-09-30 08:23 am (UTC)Re: Why PFI might be justified
Date: 2002-09-30 10:56 am (UTC)Re: Why PFI might be justified
Date: 2002-10-01 07:33 am (UTC)G
Re: Why PFI might be justified
Date: 2002-10-01 07:45 am (UTC)But if you want to participate in LJ, why not join? I have invite codes, if I know you you're probably welcome to one.
no subject
Date: 2002-09-30 09:02 am (UTC)I think it's the classic political tactic of boring people to death with endless tedious debate. I find it a tremendous effort to read about this kind of thing because I find it immensely boring to read and concentrate on the details of plans for financing things. I really have to force myself. Often I don't bother. In fact, something doesn't need to be all that boring or indeed complicated before it will make most people think: "oh God - more boring shite. I'm off down the pub."
At least I think it's not just me.
no subject
Date: 2002-10-01 05:45 am (UTC)J
Governments are even less competent, perhaps
Date: 2002-10-02 05:02 am (UTC)One argument for PFI compared to the government
doing it all, is that the government is even
more stunningly incompetent at managing such
projects than the private companies.
I can't, personally, dismiss that view out of
hand, unfortunately. And that's a -big- problem
that needs fixed; PFI is then papering over
utter governmental incompetence. More competance
required in the government.
Nicolai