New Labour was particularly fond of setting up PFI projects despite warnings from trade unions and others that these schemes would a) end up costing more b) provide huge profits for the firms involved – with many able to get funding on the basis that the projects would be underwritten by the state whatever problems might arise- and c) would present a crippling burden on the public sector as the PFI bills keep flying in. Many public sector bodies, especially those in the health sector, are now in deep trouble as the cost of PFI projects have become overwhelming. Initial estimates of costs have nearly always proved way too low (low enough to win the bid naturally) and have then shot up as things got underway. The report notes that most PFI projects have risen in cost by 6 – 7% since the start of the credit crunch crisis. Some PFI projects have ended in total disaster with the taxpayer having to foot the bill

Now we have this new report from the all-party Public Accounts Committee. Entitled ‘Lessons from PFI and other projects,’ what does it have to say? Conclusions include: 

“1.Although PFI has delivered many new public buildings and services, it has been far too easy for the Government to use it as the only form of financing available without clearly proving whether it is value for money.” In others words – we’ve been ripped off! 

“2. Tax revenue is being lost through the use of off-shore arrangements by PFI investors and the effect has not been adequately assessed. The Committee is concerned that the Treasury has no plans to address this matter.” In other words these firms have been hiding in tax shelters to hoard even more money at our expense. Tax avoidance is, the report states with usual British understatement, “not uncommon.”

“3.  The public sector has insufficient information on the returns made by PFI investors and no mechanism for sharing in gains when the investors sell their shares.”  Insufficient? What a surprise. Gains? Don’t worry; none of these will be coming our way. PFI schemes are designed for firms to make huge profits funded by the state in return for over-priced results which in turn often do not work. For example, the report notes that over £1 billion pounds has been lost to private firms working just on the M25 widening PFI project.

“4.  Transparency on the full costs and benefits of PFI projects to both the public and private sectors has been obscured by departments and investors hiding behind commercial confidentiality.” Of course they have. No one involved wants people to see what a scam PFI is – there is too much cash (for them) at stake.

“5.  The public sector has failed to make best use of commercial skills.” What the hell does this mean? It seems that the Committee – just to prove how balanced they are – want to raise this old myth about business method being necessary to carry out public projects. Well you won’t get any useful knowledge from the PFI suppliers – just hints about how to rip people off. Hang on – isn’t that what all capitalists do?

“6.  The Treasury must address the scope for greater efficiencies from PFI projects.” What do they want here? Let the report continue: “Any savings on existing contracts will be dependent on voluntary agreements by the private sector which may involve service cuts.” More likely this will result in service cuts and no savings for the public purse. These firms are not going to surrender their profits just like that.