Some weeks ago I wrote an 11-page, 13,000-word supplement for Private Eye on the PFI. The slender response was almost without exception supportive. One letter was from the former director of an investment bank that had been heavily involved in the PFI for 10 years. "PFI is a disgrace," he wrote. "The PFI teams knew it was easy money from day one. They couldn't believe how financially naive the clients and government were." An old friend, a former economics editor, wrote to congratulate me on exposing what he called a "racket". A few more cheering examples of the racket trickled into the Eye. Our position, if ignored, seemed unassailable.
Yet the more powerful the proof of this position, the more hysterically the New Labour government flouts it. David Miliband, the bright young schools minister, told last year's Labour party conference that not a new school would be built without the PFI. The Department of Health has now pretty well admitted that all future hospitals and health centres will be built with it as well. An enormous public relations machine swings into action to persuade the public that the PFI (or PPP, which is roughly the same sort of thing) is the only right and proper way to spend public money.
The price paid by the taxpayer for PFI projects goes on being paid for 30 years. Costs are bound to increase. The notorious "public sector comparator", the theoretical guarantee that a PFI proposal is cheaper than the public sector equivalent, is wide open to distortion, and anyway, it can't possibly predict the inevitable rise in costs over 30 years.
These projects are not accounted for anywhere. It is as if they have vanished off the face of the earth …
This in a way is stale buns, well known to those very few people who ask the right questions. Much fresher and more sinister are two other matters that came to light in the course of my investigation.
The first is the curious fact that many of these huge PFI public building projects don't appear in the government accounts. The government says the risk is borne by the consortiums that build them – but increasingly these consortiums are not putting the projects in their accounts either! The costs of these projects are not accounted for anywhere. It is as if several new hospitals and schools have vanished off the face of the earth. Government says "we have passed on the risk to private companies" and private companies say "the risk remains with the government". And nobody, not even the accountants who regulate these things, seems to notice the contradiction.
The second development is the sale of "PFI assets" by the consortiums to distant funds way beyond the reach of the ordinary citizen. Under the original PFI schemes, known companies, most of them registered and paying tax in Britain, took on, alongside their project, a series of responsibilities. Such as cleaning the premises, for instance, or feeding patients or maintaining buildings. As long as the companies were well known and registered, there was some hope that they would live up to at least some of these responsibilities. Such hopes fade with the sale of the assets into remote funds whose sole purpose is to extract a better return from them.
Paul Foot writes for Private Eye.