“As is normal, these contracts have been written to protect the public purse.”

April 7th, 2009 § 0 comments

The quote in the title is Jacqui Smith talking about the NHS Database.

Do not believe it. What the Tories started in 1992, Labour have embraced used it extensively. That ‘it’, is Private Finance Initiative.

The latest PFI is to widen the M25. And seeing where the money is coming from is like playing Find the Lady.

George Monbiot

The government, as usual, is telling us as little as it can get away with. But the Department for Transport has admitted that, to make the project viable, it might have to bail out the M25 consortium(12). Some reports suggest that to make sure the consortium remains solvent during the construction phase of the contract – which is worth £1280m(13) – the government will have to lend it £400m(14,15). The European Investment Bank has already pledged £500m(16), which is also taxpayers’ money. This private finance initiative scheme doesn’t require much private finance, or initiative.

If the government underwrites the scheme, the greater part of the risk will fall on taxpayers, negating the entire rationale of PFI. But, citing higher lending risks during the recession, the banks backing PFI infrastructure projects have increased their margins, in some cases by 500%(17). The government will lend or promise to lend cheap money to the banks, which will then charge us, through the consortium, crushing rates of interest for the use of our own cash.

Weird enough for you yet? Well one of the banks reported to be backing the scheme is RBS. The taxpayer now owns 58% of it. This is likely to rise soon to 95%(18). If the government underwrites the M25 expansion, it will in effect be bailing out RBS twice then charging itself for the privilege – and for the bankers’ fees, including salaries and bonuses. RBS – in other words you and me – already has £10bn invested in PFI schemes in this country(19), for which we are paying extravagant rates. If you have come across a state spending scheme madder than this, please let me know.

It’s a fucking road. The government doesn’t have to make a profit out of making it or the upkeep of it, so why can’t it just build a fucking road?
If company A can build a road and make a profit, the government should be able to match the price and build a better road or build the same road cheaper.

The governments, and not just Labour as this was started in 1992 and won’t stop if the Conservatives get back in, fucking us over, trying to i) blag the books to make themselves look good and ii) ensure employment when they retire/ get voted out.

It makes me shit-fucking-kicking mad.

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