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The people vs PFI.
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Old 31-10-2014, 21:04   #1
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The people vs PFI.

This looks interesting and it launches tomorrow.

Learn about PFI and how it affects you.

"A Short History of PFI

Private Finance Initiative (PFI) schemes were introduced in the 1990s under the John Major Government and were significantly expanded under New Labour. PFI is now in use across the NHS, Departments for Education, Local Government, Defence, Transport, and Justice with over 300 billion in PFI repayments now owed by the UK taxpayer across 700+ projects."


In his first year since becoming chancellor George Osborne (who had previously discredited PFI) approved no less than 61 PFI projects worth almost 7bn.

Cardigan.
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Old 31-10-2014, 23:36   #2
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Re: The people vs PFI.

Nothing wrong with PFI, if done correctly.

Labour cocked it up royally.

PFI should not be a dirty word, it's a good concept and can work.
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Old 01-11-2014, 09:59   #3
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Re: The people vs PFI.

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Originally Posted by Pierre View Post
Nothing wrong with PFI, if done correctly.

Labour cocked it up royally.

PFI should not be a dirty word, it's a good concept and can work.
But mostly at present it doesn't work well.
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Old 01-11-2014, 11:29   #4
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Re: The people vs PFI.

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Originally Posted by Pierre View Post
Nothing wrong with PFI, if done correctly.

Labour cocked it up royally.

PFI should not be a dirty word, it's a good concept and can work.
Correct. IMHO the PFI frenzy was politically motivated in a cynical attempt to 'buy' votes quickly - typical of Labour tactics of buy now pay later. As usual, those who negotiated the contracts on the public's behalf were inept with the result that many became virtual cash cows for the companies involved and have even been traded, making the original contract holders large profits for doing nothing.

Quote:
Private contractors have pocketed hundreds of millions of pounds of profits in the past four years by exploiting deals that were controversially awarded to them by the last Labour government.
http://www.independent.co.uk/news/uk...i-9488351.html
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Old 01-11-2014, 11:39   #5
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Re: The people vs PFI.

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Originally Posted by Maggy J View Post
But mostly at present it doesn't work well.

You are quite right Maggy.

The Treasury report in 2011 highlighted the shortcomings of PFI and called into question it's supposed "Value for money". It even went as far as to suggest it was used as a means to conceal debt.

"The price of finance is significantly higher with a PFI. The financial cost of repaying the capital investment of PFI investors is therefore considerably greater than the equivalent repayment of direct government investment. We have not seen evidence to suggest that this inefficient method of financing has been offset by the perceived benefits of PFI from increased risk transfer. On the contrary there is evidence of the opposite. Organisations which have the option of other funding routes have increasingly opted against using PFI and have even brought PFIs back in-house. TfL's cost of borrowing is higher than government's, and yet it still considers this is overall better value for money than PFI. The incentive for government departments to use PFI to leverage up their budgets, and to some extent for the Treasury to use PFI to conceal debt, has resulted in neglecting the long term value for money implications. We do not believe that PFI can be relied upon to provide good value for money without substantial reform."

The coalition, in Osborne, has even since then been throwing PFI contracts around like confetti. No lessons learned there, obviously. Like his predecessors many of his friends will be making a killing from these contracts.

Still, PFI was after all a Tory idea so we should expect nothing less.
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Old 01-11-2014, 13:00   #6
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Re: The people vs PFI.

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Originally Posted by Mr Angry View Post
Still, PFI was after all a Tory idea so we should expect nothing less.
Though no-one compelled Labour to spend so heavily during a boom that they were increasing our debt to GDP ratio, alongside these off-book liabilities that they were accumulating and the tax increases they were enacting.

States are supposed to deleverage during growth periods so that the stabilisers can kick in during recessionary parts of the cycle without causing major issues.

It was, without a doubt, a means to conceal debt and remains as such. It will likely only get worse with the completely misplaced obsession over our debt and deficit.

It would be fabulous if people were shown our current unfunded liabilities. That would put the alleged debt into some focus.

As it is we're, including what PFI has stashed away, in a level of debt not seen since the early 60s and our recovery from the Second World War, thanks to a wonderful series of inept decisions by economic illiterates over the past couple of decades.
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Old 01-11-2014, 13:14   #7
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Re: The people vs PFI.

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Originally Posted by Ignitionnet View Post
Though no-one compelled Labour to spend so heavily during a boom that they were increasing our debt to GDP ratio, alongside these off-book liabilities that they were accumulating and the tax increases they were enacting.

States are supposed to deleverage during growth periods so that the stabilisers can kick in during recessionary parts of the cycle without causing major issues.

It was, without a doubt, a means to conceal debt and remains as such. It will likely only get worse with the completely misplaced obsession over our debt and deficit.

It would be fabulous if people were shown our current unfunded liabilities. That would put the alleged debt into some focus.

As it is we're, including what PFI has stashed away, in a level of debt not seen since the early 60s and our recovery from the Second World War, thanks to a wonderful series of inept decisions by economic illiterates over the past couple of decades.
You're absolutely right. I'm certainly not trying or seeking to excuse the behaviour of the Labour Government during their term but we must deal with the facts.

As a mechanisim it was designed in such a fashion that it could be used to conceal / misrepresent debt. It was devised by the conservatives and the current chancellor is still throwing his friends bones despite having previously discredited the mechanism itself and having been warned repeatedly by the Treasury as to the dangers of an over reliance on the mechanism as a funding means.

The succession of economic illiterates to whom you refer have relied on, and continue to rely upon, the economic illiteracy of the electorate whilst awarding their friends billions in contracts and further bolstering their wealth.
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Old 01-11-2014, 14:28   #8
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Re: The people vs PFI.

Quote:
Originally Posted by Ignitionnet View Post
Though no-one compelled Labour to spend so heavily during a boom that they were increasing our debt to GDP ratio, alongside these off-book liabilities that they were accumulating and the tax increases they were enacting.

States are supposed to deleverage during growth periods so that the stabilisers can kick in during recessionary parts of the cycle without causing major issues.

It was, without a doubt, a means to conceal debt and remains as such. It will likely only get worse with the completely misplaced obsession over our debt and deficit.

It would be fabulous if people were shown our current unfunded liabilities. That would put the alleged debt into some focus.

As it is we're, including what PFI has stashed away, in a level of debt not seen since the early 60s and our recovery from the Second World War, thanks to a wonderful series of inept decisions by economic illiterates over the past couple of decades.


A Tory idea which, in practice, was almost entirely implemented, manipulated and misused by Labour. The worrying thing is that, as with immigration, I don't think these were all just mistakes made by inept people. I think there was a large dose of political cynicism at work - short term gain at the ballot box which, the real price of which, if all went well, would either never become apparent to the electorate or would do so only after those responsible had long left office and would be living the high life on their fat perks and pensions.
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Old 01-11-2014, 16:26   #9
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Re: The people vs PFI.

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Originally Posted by Osem View Post


A Tory idea which, in practice, was almost entirely implemented, manipulated and misused by Labour. The worrying thing is that, as with immigration, I don't think these were all just mistakes made by inept people. I think there was a large dose of political cynicism at work - short term gain at the ballot box which, the real price of which, if all went well, would either never become apparent to the electorate or would do so only after those responsible had long left office and would be living the high life on their fat perks and pensions.
This isn't a partisan issue and I see no point in handing out blame. It wasn't manipulated or misused by Labour, they were doing the exact same things with it the previous Conservative government were, and the current government are following much the same course.

I honestly couldn't care less about which party is involved or how they are doing it, neither should be doing it. There is absolutely no reason, in the current environment of record low bond yields, for the state to even contemplate PFI.

Our current interest rate on 10 year gilts is 2.25%. Why in the holy mother of copulation would a government be using far more expensive PFI?

It is of course obvious - they can hide PFI from the deficit figures, and they staked their reputation on reducing the deficit which of course they've abysmally failed to.

Just FYI while Osborne, Cameron etc are trying to get people to bow and scrape to them over their 'tough decisions' to get the deficit down, Barack Obama pumped cash into the US economy through a series of stimulus packages and, oh look, the US deficit hasn't gone up, nor has it been cut by a third, but been reduced by over 70% from 10% of GDP to 2.8% of GDP.

While the previous administration entered into a number of bad PFI deals and were corporatist, this one has been simply sado-masochistic with their economic management, however the only masochism has been political, they and their mates are doing superbly thanks very much.

---------- Post added at 15:26 ---------- Previous post was at 15:22 ----------

Quote:
Originally Posted by Pierre View Post
Nothing wrong with PFI, if done correctly.

Labour cocked it up royally.

PFI should not be a dirty word, it's a good concept and can work.
PFI only works when the private sector offer better value for money but that requires quite a few factors to fall into place.

Most of the time PFI only offers better value for money when the private company have screwed up and will be going bankrupt as a result.
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Old 01-11-2014, 16:30   #10
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Re: The people vs PFI.

PFI is like outsourcing - you need to know exactly what you are getting for the money, and what is extra.

You can't outsource a problem (without it costing you more), and if you don't have good commercial negotiations on the PFI contract (as on most contracts), everything that isn't in the contract will cost extra....
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Old 01-11-2014, 16:46   #11
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Re: The people vs PFI.

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Originally Posted by Hugh View Post
PFI is like outsourcing - you need to know exactly what you are getting for the money, and what is extra.

You can't outsource a problem (without it costing you more), and if you don't have good commercial negotiations on the PFI contract (as on most contracts), everything that isn't in the contract will cost extra....
Pretty much it.

You need to have some commercial wherewithal, the problem with councils and public authorities is that they usually have no clue how to run anything commercially.
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Old 01-11-2014, 16:51   #12
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Re: The people vs PFI.

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Originally Posted by Pierre View Post
Pretty much it.

You need to have some commercial wherewithal, the problem with councils and public authorities is that they usually have no clue how to run anything commercially.
And if they try to hire those that do, on appropriate salaries, there are cries of "wasted money" and "overpaid civil servants"....

People often focus on cost, not value....
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Old 01-11-2014, 17:47   #13
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Re: The people vs PFI.

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And if they try to hire those that do, on appropriate salaries, there are cries of "wasted money" and "overpaid civil servants"....

People often focus on cost, not value....
That is true. We can't hope to have civil servants who can compete with their commercial counterparts unless there is some reason for these people not to choose the private sector. What we don't need, however, are clueless civil servants who never seem to pay for their mistakes. Did anything ever happen to those who were responsible for getting the Virgin trains sums wrong?
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Old 01-11-2014, 18:07   #14
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Re: The people vs PFI.

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Originally Posted by Osem View Post
That is true. We can't hope to have civil servants who can compete with their commercial counterparts unless there is some reason for these people not to choose the private sector. What we don't need, however, are clueless civil servants who never seem to pay for their mistakes. Did anything ever happen to those who were responsible for getting the Virgin trains sums wrong?
They're working on how to screw the taxpayer out of the most money rushing to re-privatise the profitable East Coast Mainline before too many people ask what possible reason beyond dogma there is to do so.
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Old 01-11-2014, 18:13   #15
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Re: The people vs PFI.

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Originally Posted by Ignitionnet View Post
They're working on how to screw the taxpayer out of the most money rushing to re-privatise the profitable East Coast Mainline before too many people ask what possible reason beyond dogma there is to do so.
Is that their punishment or ours?
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