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Pfi Chickens Coming Home To Roost - Brown Stains On The Public Finances

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(In the Sunday Times main paper p12 - so can't link to it.)

The ST article's titled "Bills Soar for 'build now, pay later' hospitals" and cites examples from NuLab's portfolio of 650 PFI agreements.

Their cost is hitting home in these straightened times and the ST article cites these examples:

  • Coventry University hospital cost £380m to build, but taxpayers will pay £3,300m by the time it's paid off in 2041
  • It costs £10 per day to park there by PFI firm Innisfree (a badly named company if there ever was one!)
  • Cov residents have set up a 4500 strong Facebook group on the issue (if you want to get involved) and aim to save £450m by reducing interest charged by 0.3% or so

Other examples of legal gouging under PFI contracts cited were:

  • A Portsmouth hospital has it's meals pre-cooked in Wales and then driven 150 miles to Portsmouth
  • Burnley schools can pay many times the retail price for goods e.g. that £1000 for a £200 computer desk, laptops at x2 retail
  • A Notts School wil have to pay hefty compensation to their PFI contractors if they remove their vending machines that sell sweets (which begs the question who runs the school?)

MPs have formed a 50 strong cross party group to re-negotiate pfi's, led by Tory MP Jesse Norman who says "It is only right that the consortia behind PFI 's should contribute their fair share of public sector cuts - no one should exempt.". A hospital in his Hereford constituancy was charged £963 to install a TV arial in a staff room under its PFI agreement with WS Atkins.

Presumably the current holders of the PFI contracts will tell the MPs and the taxpayer to spin on it, and keep coughing up. In any case there is now apparently a thriving secondary traded market in traded PFI equities, as our schools, prisons, and hospitals are hawked like pork belly futures between speculators. So those that made the original PFI agreements could be long gone with their bags full of dosh by now.

And they could be like the aircraft carrier contracts, too expensive to cancel.

Gordon Brown and Nu Labour - the gift that keeps on giving....

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The Government should simply pass an act declaring most of these PFI contracts illegal. Ownership of the asset should revert to the Nation.

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The Government should simply pass an act declaring most of these PFI contracts illegal. Ownership of the asset should revert to the Nation.

Theyve got contracts, our state is built upon the rule of law theyve f'ed up gargantuan proportions this time

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"•A Notts School wil have to pay hefty compensation to their PFI contractors if they remove their vending machines that sell sweets (which begs the question who runs the school?)"

No need for the school to remove the vending machine - simply charge the PFI contractor access to the school's electricity socket at £1000 per week.

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Theyve got contracts, our state is built upon the rule of law theyve f'ed up gargantuan proportions this time

Act of Parliament has total supremacy. They can pass a bill with ease if the will is there.

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"•A Notts School wil have to pay hefty compensation to their PFI contractors if they remove their vending machines that sell sweets (which begs the question who runs the school?)"

No need for the school to remove the vending machine - simply charge the PFI contractor access to the school's electricity socket at £1000 per week.

That's the point. It's the PFI contractor's electricity socket, not the school's. The school rents it, and the rest of the building.

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The Government should simply pass an act declaring most of these PFI contracts illegal. Ownership of the asset should revert to the Nation.

I'm trying to imagine a government dominated by the Conservatives nationalising anything. And failing.

It would be anathema to them philosophically.

And even if they believed the practicalities outweighed the philosophy, the business lobby would soon nobble them.

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Act of Parliament has total supremacy. They can pass a bill with ease if the will is there.

The will isn't there though yet. Maybe when MP's are getting strung up. PFI was a means of channelling taxpayers money to crony capitalists, party supporters, banksters and various shady elites.

Parliament is sovereign, so the could nationalise the PFI firms without compensation if need be.

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Theyve got contracts, our state is built upon the rule of law theyve f'ed up gargantuan proportions this time

I have a £5 note in my pocket...its a promise, a contract.

Merv didnt give a frack when he devalued that by QE.

No politician gave a frack when they set the DEVALUATION TARGET to 2%.

Why should we give a frack if they devalue PFI promises too?

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I have a £5 note in my pocket...its a promise, a contract.

Merv didnt give a frack when he devalued that by QE.

No politician gave a frack when they set the DEVALUATION TARGET to 2%.

Why should we give a frack if they devalue PFI promises too?

The aim of the game is to preserve the wealth of the rich elite, not that of the general population. In fact the general population is going to have to get (a lot) poorer in real terms so the rich can stay rich. Check out Bernanke's comments on using QE in the States to keep the stock market high.

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I have a £5 note in my pocket...its a promise, a contract.

Merv didnt give a frack when he devalued that by QE.

No politician gave a frack when they set the DEVALUATION TARGET to 2%.

Why should we give a frack if they devalue PFI promises too?

Youve still got the 5a in your pocket, they havent swapped it for a 20 pence piece.

Now you can argue against what ive said but theyve got the govt by the short and curlys and nothing short of a BNP govt is going to change it. (hence it isnt going to happen)

Edited by BuyInOxford

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Youve still got the 5a in your pocket, they havent swapped it for a 20 pence piece.

Now you can argue against what ive said but theyve got the govt by the short and curlys and nothing short of a BNP govt is going to change it. (hence it isnt going to happen)

course they have...the note is the same, but the promise has been devalued.

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Youve still got the 5a in your pocket, they havent swapped it for a 20 pence piece.

The 'miracle' of inflation is that it devalues debt as well as credit (just two sides of the same coin).

Given that the government is massively in debt and that this debt is largely denominated in a currency they control, it doesn't take an economics Einstein to figure out whether or not the government will print,debase and inflate.

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Act of Parliament has total supremacy. They can pass a bill with ease if the will is there.

Whilst this is technically possible, it would be challenged in the courts and could severely damage business confidence.

But there are better ways. For example Parliament could probably mandate nationalisation of the Coventry University Hospital at a fair market price which could be financed via government bonds at almost 0% interest. That would probably save the taxpayer something like £3 billion.

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The 'miracle' of inflation is that it devalues debt as well as credit (just two sides of the same coin).

Given that the government is massively in debt and that this debt is largely denominated in a currency they control, it doesn't take an economics Einstein to figure out whether or not the government will print,debase and inflate.

OK but the 5a will still by a 5a's worth of goods no matter how much inflation there is.

But back to the original post there is pretty much nothing the govt can do, if anyone thinks any mainstream party is going to break contracts then good luck to them.

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Anyone know the relevant facebook page?

I wondered about that to, but I'm not on facebook so can't sign in an search for it there. I did google for it though and found this nugget from the BBC in Feb 2010:

Parking charges campaign over Coventry hospital

More than 4,000 people are supporting a campaign on social networking site Facebook to get parking charges abolished at a hospital.

.........Babs Hopley, of Chapel Fields, Coventry, said it was "ridiculous" to pay £20 over two days in January.

The hospital said it does not make money out of car parks or set charges and pays a private provider.

In a statement, it added: "We understand how important it is for people to park on site while they are receiving treatment or visiting a patient.

"University Hospital is a PFI hospital and is legally bound by a contract, signed in 2002, to pay a private provider for the use of its car parks.

"To scrap car parking charges while the contract is in place would cost the trust £2.4m each year from its healthcare budgets which, to put into context, is like closing two to three wards.

So it looks like the folk of Cov are stuck with whatever the 'private provider' wants to charge until 2041.

The mildly depressing aspect is that it's car parking fees that's galvanised a Facebook 'protest' rather than the much bigger issue of the value and cost of PFI.

......

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..... For example Parliament could probably mandate nationalisation of the Coventry University Hospital at a fair market price which could be financed via government bonds at almost 0% interest. That would probably save the taxpayer something like £3 billion.

The Tories invented PFI and privatisation. They are not going to nationalise anything nor are they going to take their rich friend's money off them. The taxpayer will pay. And pay. And pay. Borrowing is the only answer. The government will borrow. And borrow. And borrow.

This time next year PR guru Camoron will start the campaign to soften up the rank and file as to why the ConDems failed to balance the books. Finances were even worse than we thought, Brown was even more hopeless than we thought, some things have not been possible (aircraft carriers - big cheese Tory chummie at BAe "just not cricket David, never thought you would sh1t on an old friend, what"). If you can think up some clever lies to tell people email them to DC and you could win a Tory Party coffee mug.

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The govenrment can alter ths pfi and scrap it, the ydo have the power, they prefer not to because tomany wealthy people have their hands in those pockets, if they alter various social contracts with the unemployed and low workers then they can damn well do it to the rich.

The Telegrapgh should run an investigation into pfi and MPs they'll be surprised about their findings.;)

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The Tories invented PFI and privatisation. They are not going to nationalise anything nor are they going to take their rich friend's money off them. The taxpayer will pay. And pay. And pay. Borrowing is the only answer. The government will borrow. And borrow. And borrow.

What you forgot to add is that yes the tories invented it thing is when they did it was on preferential terms to the government. When labour ran with it it was incredibly preferential to the private body who engaged in it.

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The Tories invented PFI and privatisation.

It comes up a lot this, when the Tories dabbled in PFI it was for large scale projects such as the Channel Tunnel.

Brown used it politically and ubiquitously to obtain short-term political gain, whilst hiding the cost off budget. In those circumstances - not his problem - value was secondary.

PFI and how it operated has been an absolute scandal; poor business, complicated, uncompetitive and no doubt riddled with corruption. If only the press would get their teeth into it.

It's a bit like MPs making decisions on the housing market, when they are up to their eyeballs in BTL.

Edited by tinker

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Whilst this is technically possible, it would be challenged in the courts and could severely damage business confidence.

But there are better ways. For example Parliament could probably mandate nationalisation of the Coventry University Hospital at a fair market price which could be financed via government bonds at almost 0% interest. That would probably save the taxpayer something like £3 billion.

Out of interest how would you decide what a fair price is?

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This is the Govermnent's equivalent of door-knocking loan sharks!

I think anyone, whether right of left leaning can see this was wrong! :angry:

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Out of interest how would you decide what a fair price is?

The same way that the price of any other private hospital would be determined; someone would have to be engaged to value it. Considering (I assume) that it is occupied and used by the NHS (has no profit stream), then I would speculate that the valuation would largely be based upon the value of land, building and plant,. Even if the government paid, say, £500 million, this would be a tidy short term profit for the firm and the government would still save a large sum, if I understand the numbers correctly.

These types of arrangements are made all the time when private property is acquired for new bridges, highways, train stations, etc. I don't see any reason why this couldn't be extended to pfi agreements involving the national interest.

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  • 261 Brexit, House prices and Summer 2020

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      • down 5% +
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      • up 5%



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