Join the Socialist Party Join us today!

Printable version Printable version

Facebook   Twitter

Link to this page: http://www.socialistparty.org.uk/issue/374/6120

From The Socialist newspaper, 11 December 2004

Private contractors rip off public services

GORDON BROWN'S pre-budget speech ignored many important problems, not least about the funding of vital public services such as the NHS.

Roger Shrives

Even some capitalist newspapers - though not many - are forced to admit that the Private Finance Initiative (PFI) has been a huge waste of money and resources. Services could have improved immeasurably more if so much of our money ploughed in by New Labour hadn't been labelled "for PFI fat cats only".

Between 2000 and 2003, 26% of the increase in NHS income went towards paying PFI charges for new hospitals. The government has paid up to 30% more in construction costs for hospitals built under PFI, says a report by the Association of Chartered Certified Accountants (ACCA).

PFI is such an expensive way of financing, that six of the 13 PFI hospitals are in the red. ACCA called it redistribution of income from the public to the private sector.

Private sector consortia - usually including building contractors, maintenance firms and finance specialists - get PFI contracts to build hospitals, schools, road and rail projects, prisons etc.

But relying on profit to operate and maintain public services creates many problems. For a start, many PFI schemes are designed to be expensive and high profit. Walsgrave Hospital in Coventry could have been refurbished for 30 million but it was knocked down at a cost of 330 million leaving fewer hospital beds in the city as a whole.

Consortium members invest in the construction, usually supplying about 10% of the funding according to the Financial Times. There is a slight risk that construction might run late or cost too much to build or operate. So many companies charge a 'risk premium' of about 30% to make sure this doesn't happen!

Once the building is complete, the government pays the consortium a fee for use of the building and management. After paying debts, operating costs etc, it's all profit. If things go well for these fat cats, the level of risk diminishes steadily and their contract lasts for some 30 years.

To quote the Financial Times, hardly a socialist paper: "Members of the consortia can sit tight and collect their share of the fees over the life of the contract."

The ACCA report looked at the first eight privately financed roads, where the government paid the consortia according to how many cars and lorries used them.

In just three years, the Highways Agency paid them 618 million - considerably more than the entire 590 million capital cost of the roads. The government could have paid for all eight schemes itself. Under PFI, however, the consortia will get 6 billion over their 30-year contracts.

Why not click here to join the Socialist Party, or click here to donate to the Socialist Party.


In The Socialist 11 December 2004:

Bring the troops home

US plans crumble in Iraq


Socialist Party campaigns

Schools victory!

Private contractors rip off public services

Saving pensions: united action needed

Britain's Guantanamo

Christmas 2004 Appeal Letter


International socialist news and analysis

USA: Poverty in the world's richest country

Concrete steps towards formation of new party

Italy stops in fifth general strike against Berlusconi

Belgium: Fighting the fascists in Gent


Socialist Party workplace news

Challenge to UNISON'S Labour links by UNISON general secretary candidate

BBC jobs under threat

Fighting the fire service cuts


 

Home   |   The Socialist 11 December 2004   |   Join the Socialist Party

Subscribe   |   Donate  




Related links:

PFI:

triangleSheffield Labour council threatens peaceful protesters with prison

triangleNo cuts - hands off King George A&E!

triangleNHS meltdown - fight the Tory cuts

triangleTories wreck our NHS

trianglePlans to bring A-levels back to Knowsley abandoned

Hospitals:

triangleChatsworth ward campaign replies to Tory MP's intervention

triangleTragic death highlights Chatsworth ward closure risk

triangleDeal concludes Barts health strike - "We have raised our heads high"

triangleBarts strike - 'Up the ante' if necessary

Reports and campaigns

Reports and campaigns

19/10/17

North West

Arriva North West bus drivers strike over pay

18/10/17

Democratic rights

Conference on state spies: who's watching who?

18/10/17

Leeds

Striking back against sackers' charter at Leeds Uni

18/10/17

Royal Mail

Royal Mail bosses block strike - back postal workers

18/10/17

PCS

Balloting members on the pay cap

18/10/17

Art

'Dazzling' Bad Art show points to socialist future

18/10/17

Council

Sheffield Labour council threatens peaceful protesters with prison

18/10/17

South West Wales

Hundreds turn out for rally aimed at removing west Wales Tory MP

18/10/17

NHS

Uprising to save the NHS!

18/10/17

Socialism

Can you donate to the Socialism 2017 appeal?

18/10/17

East London

No cuts - hands off King George A&E!

18/10/17

North London

North London hospital workers fight cuts and job losses

18/10/17

BAE

Nationalise to save jobs at BAE Systems

18/10/17

Schools

Schools "can't go any further" - stop the cuts: set deficit budgets now

18/10/17

Swansea

Socialist Students 'welcome' Hillary Clinton to Swansea

triangleMore Reports and campaigns articles...


Join the Socialist Party
Subscribe to Socialist Party publications
Donate to the Socialist Party

triangle19 Oct Arriva North West bus drivers strike over pay

triangle18 Oct Russia, October 1917: When workers took power

triangle18 Oct Tories torn - bin them now

triangle18 Oct Royal Mail bosses block strike - back postal workers

triangle18 Oct Balloting members on the pay cap

triangle13 Oct The end of the Tories?

triangle11 Oct Nasty party imploding...drive out the Tories

More ...

triangle23 Oct Chesterfield Socialist Party: The continuing struggle for abortion rights

triangle24 Oct Liverpool Socialist Party: The October Russian Revolution 100 years ago to the day

triangle25 Oct Salford Socialist Party: The October 1917 Russian revolution

triangle25 Oct Swansea Socialist Party: Mother Jones - A US labour pioneer

More ...

Socialist Party Facebook page
Socialist Party on Twitter
Visit us on Youtube

Archive

Archives:

October 2017

September 2017

August 2017

July 2017

June 2017

May 2017

April 2017

March 2017

February 2017

January 2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

Legal

SP RSS feed RSS

Platform setting: = No platform choice

V2