Lewisham and PFI: Better than privatisation for whom? Part 2 of 3
More and more big public sector projects are being carried out with Private Finance Initiative money, and Lewisham is no exception. Police stations, hospitals, schools, and even a train station among other projects in the borough have all been touched by PFI. Touted as being value for money and more modernising than privatisation, who really has it been better for?
The biggest PFI project in Lewisham to date – the £202m DLR extension – was part of the National Audit Office survey sample in its PFI debt refinancing and equity report. This was produced after it was revealed that gains from refinancing PFI debt were not, in many instances, contractually obliged to be shared with the related local authorities. This followed after George Monbiot’s revelation over four years ago that Octagon Healthcare, the private consortium building the Norfolk and Norwich hospital, was in a position to extract £70 million from the scheme, before it had taken a single patient. This windfall came as a result of debt refinancing. Roll on four years, and new PFI contracts have explicit clauses in dividing up refinancing gains – small wonder they have decreased since the scandal broke: The NAO said the Government would have rights to only £137million since 2004. Not get the money in one go, mind you. Spread out over years. And in some instances, previous PFI contracts have extended their lifespan by means of squaring things up with contractors: Further enhancing their value on the trading market (PFI share dealing, worth some £4billion annually, is not affected this way, only PFI debt refinancing). George Monbiot cynically believes refinancing clauses were even deliberately left out initially so as to entice PFI contractors in the first place!
It seems to me that for all the evil privatisation is made out to be, especially in the area of public services, there is a lot to be said about how sinister PFI deals are. At least with privatisation, and I am not advocating it as a cure-all, once the deal was done then at least the taxpayer was freed of the burden of supporting the service. Could you imagine British Airways, BT, the railways, British Gas and the other utilities being run today under PFI? In operation since 1992, PFI deals have promised a quick fix to public service investment needs but they carry a big cost - £150billion to taxpayers over the next three decades, and they do not have to be efficient…