Pfi Rip-Off

[jfk]

Just chatting with a colleague, very interesting conversation.

Need to buy in some very expensive high tech equipment, costing up the NHS demands needed;

Couple of 30A power supply points: installation £2k (you could get a whole flat rewired for that!)

Maintenance of said power sockets: £150 per year

... this cost is mandatory. No escaping it. Machines are housed in NHS facilities (well, PFI facilities) - you have no choice but to pay this.

What an absolute disgusting rip-off.

2k to install a couple of power points and nearly a couple of hundred for someone to come around annually look at power sockets and say "yes they are fine"

[Bloo Loo]

Just chatting with a colleague, very interesting conversation.

Need to buy in some very expensive high tech equipment, costing up the NHS demands needed;

Couple of 30A power supply points: installation £2k (you could get a whole flat rewired for that!)

Maintenance of said power sockets: £150 per year

... this cost is mandatory. No escaping it. Machines are housed in NHS facilities (well, PFI facilities) - you have no choice but to pay this.

What an absolute disgusting rip-off.

2k to install a couple of power points and nearly a couple of hundred for someone to come around annually look at power sockets and say "yes they are fine"

why is maintenance of a power socket mandatory?

[jfk]

why is maintenance of a power socket mandatory?

Everything has to be signed off as tested annually - every single piece of electrical equipment in the hospital. Not sure about the sockets. None of the other hundred-odd sockets we have are checked.

Even in the same lab where there are a couple of other 30A power suppiles - these aren't checked annually.

It's just a money-printing operation.

[Lepista]

Why are you blaming the private sector for this waste?

[kilroy]

Just chatting with a colleague, very interesting conversation.

Need to buy in some very expensive high tech equipment, costing up the NHS demands needed;

Couple of 30A power supply points: installation £2k (you could get a whole flat rewired for that!)

Maintenance of said power sockets: £150 per year

... this cost is mandatory. No escaping it. Machines are housed in NHS facilities (well, PFI facilities) - you have no choice but to pay this.

What an absolute disgusting rip-off.

2k to install a couple of power points and nearly a couple of hundred for someone to come around annually look at power sockets and say "yes they are fine"

It was the government who agreed to these ludicrous prices that ripped us off, not the companies who quoted them.

[interestrateripoff]

It was the government who agreed to these ludicrous prices that ripped us off, not the companies who quoted them.

And the taxpayer foots the bill.

[Bull]

Why are you blaming the private sector for this waste?

Its not so much blame, but the private contractor looks at ways it can maximise it profits - they generally don't give a stuff about where the money is coming from. Wouldn't be surprised if the negotiators on behalf of the NHS, with regards to the contract, got a kick back to enable this to happen.

[jfk]

It just infuriates me when our dept is being cut (not the managers though!) - we are supposed to be taking on 25% more casework ... and there is no increase in staff. There's been an exercise in amalgamating some of the labs and the managers have been running around empire building fiddling whilst rome burns.

The monkeys who negotiated these contracts in the NHS need stringing up, they are complete morons. I suppose the private sector is only doing what it is supposed to do - maximise profit. That doesn't sit easily with me actually working here as a front-line worker in the health care sector...

[Lepista]

The monkeys who negotiated these contracts in the NHS need stringing up, they are complete morons.

I wouldn't be surprised to find them sitting on the board of the pfi company a year or so after the deal was made.

[RichB]

So go for a management role, or figure out how to start a company to outsource what you do. Might have to cut in a couple of layers of management for consulting fees, but I'm sure you can manage it.

Jump aboard, before you miss the train.

[_w_]

It was the government who agreed to these ludicrous prices that ripped us off, not the companies who quoted them.

Who do you think told the government to so this?

[_w_]

It's just a money-printing operation.

No, it is wealth redistribution. Not the in the way you would normally expect, but just as pervasive.

[RichB]

No, it is wealth redistribution. Not the in the way you would normally expect, but just as pervasive.

Equivalent of the old Victorian Road and Bridge building programs, just make work, with hopefully a marginal side benefit.

[bulboy]

we have a saying back in Bulgaria which is wildly translated as:

The one that eats the pie is not mad, the one that gives it away is...

Especially if you can customize the filling

[enrieb]

As annoyed as I am by the PFI scam, its not really the private sector that I blame. These so called private companies are not generating wealth or creating anything that benefits society they are simply Secondary tax consumers (companies that only exist due to tax subsidy). Few people begrudge paying tax for Primary tax consumers like doctors, nurses, teachers, police etc.. but many of these so called 'private companies' are ex-public sector middle management that have set up these companies to get around public sector pay scales. They identify a problem, set up a company and then provide the service, and then use their contacts in the public sector management to award them juicy contracts with kick backs to their pals who give them all the work.

[winkie]

Its not so much blame, but the private contractor looks at ways it can maximise it profits - they generally don't give a stuff about where the money is coming from. Wouldn't be surprised if the negotiators on behalf of the NHS, with regards to the contract, got a kick back to enable this to happen.

....No, that would never happen.

[Sledgehead]

What the OP has to recognise is that this practice is endemic.

Just wander down to a shop and buy a sandwich. How much did the electricity cost to bake the bread? Pennies. How much did the wheat cost to make the flour? Nothing. How much did the filling cost. Nearly zero.

What you are paying for are all the wages of the people involved in the delivery of that sandwich to your belly. Yes, there may be some executives taking big salaries, but those will be spead thinner per sandwich than the butter in the sandwich. Instead, you are paying for the wages of all the little bods in the chain and all the taxes they have to pay and all the compliance staff that oversee, along with the taxes they pay and all the lawyers that advise them, along with all their taxes, not to mention the financiers and the wages they take and taxes they pay and all these wages are dependent on ... the price of things, including ... sandwiches.

The problem with doing anything, other than for yourself in this society, is the sheer cost of getting others involved. As soon as you do that somebody throws a bunch of regs at everyone in the supply chain. Suddenly a socket costs £10k.

Just remebered - in Britain's Next Big Thing, Theo Paphitas showed how even something as apparently simple and profitable as retail (200->100% mark-up on wholesale price) results in net profit margins of only ~5%. Think about it: I give you a product, packaged and ready for the shelves, you charge customers twice to three times what I sold it to you for and all you end up making is a measly 5%. You soon realise that everything you buy is preactically worthless in itself. All you are buying is the time of lawyers, fitters, landlords, accountants, distributors, buyers, advertisers, marketers, floor walkers, shelf stackers. Sobering.

Edited May 16, 2011 by Sledgehead

[Rare Bear]

What the OP has to recognise is that this practice is endemic.

Just wander down to a shop and buy a sandwich. How much did the electricity cost to bake the bread? Pennies. How much did the wheat cost to make the flour? Nothing. How much did the filling cost. Nearly zero.

What you are paying for are all the wages of the people involved in the delivery of that sandwich to your belly. Yes, there may be some executives taking big salaries, but those will be spead thinner per sandwich than the butter in the sandwich. Instead, you are paying for the wages of all the little bods in the chain and all the taxes they have to pay and all the compliance staff that oversee, along with the taxes they pay and all the lawyers that advise them, along with all their taxes, not to mention the financiers and the wages they take and taxes they pay and all these wages are dependent on ... the price of things, including ... sandwiches.

The problem with doing anything, other than for yourself in this society, is the sheer cost of getting others involved. As soon as you do that somebody throws a bunch of regs at everyone in the supply chain. Suddenly a socket costs £10k.

Just remebered - in Britain's Next Big Thing, Theo Paphitas showed how even something as apparently simple and profitable as retail (200->100% mark-up on wholesale price) results in net profit margins of only ~5%. Think about it: I give you a product, packaged and ready for the shelves, you charge customers twice to three times what I sold it to you for and all you end up making is a measly 5%. You soon realise that everything you buy is preactically worthless in itself. All you are buying is the time of lawyers, fitters, landlords, accountants, distributors, buyers, advertisers, marketers, floor walkers, shelf stackers. Sobering.

Yes, I worked for a retailer for some years and while the gross margins look fantastic the nett margins are a helluva lot slimmer. Contrary to the belief of a lot of people on this board, wages were one of the biggest costs.

[eric pebble]

Yes, I worked for a retailer for some years and while the gross margins look fantastic the nett margins are a helluva lot slimmer. Contrary to the belief of a lot of people on this board, wages were one of the biggest costs.

Yes -- But don't forget - at the top of the list of costs with wages - is PROPERTY PRICES/RENTS ....... Which give rise to the need for high wages for wage-earners to merely survive. In a place like London - where Rip-off Property Prices abound - the average worker/wage -earner HAS TO earn £xyz JUST TO SURVIVE -- and you'll find MANY if not MOST people are barely surviving.

So - it's the age-old chicken and egg question -- Which came first? The high property prices or the high wage requirements? A bit of both I suppose..... But, in historic terms, the property prices are absolutely ludicrous and actually UNSUSTAINABLE in relation to what MANY people are earning.

How long can it go on for?

[winkie]

What the OP has to recognise is that this practice is endemic.

All you are buying is the time of lawyers, fitters, landlords, accountants, distributors, buyers, advertisers, marketers, floor walkers, shelf stackers. Sobering.

Cut out the middle men I say.....keep it simple....keep it profitable....keep it going, or die.

[Jimmer]

PFI = pretty f*cking idiotic

It was actually Mussolini that came up with the idea of PFI. So why don't OUR trains run on time?

In other NHS waste news, my OH (a district nurse) has just been issued her THIRD different uniform (this one's cornflower blue rather than navy blue) in two years, as the healthcare trust she works under has been changed / reorganised / whatever has changed. Does not compute!!!

[winkie]

PFI = pretty f*cking idiotic

It was actually Mussolini that came up with the idea of PFI. So why don't OUR trains run on time?

In other NHS waste news, my OH (a district nurse) has just been issued her THIRD different uniform (this one's cornflower blue rather than navy blue) in two years, as the healthcare trust she works under has been changed / reorganised / whatever has changed. Does not compute!!!

It is easy to spend other peoples money.

[Milton]

PFI:

Quote

Private Finance Initiative

As things stand, the ONS only includes PFI contracts in their measure of public sector debt if they are deemed to be so-called finance lease liabilities (i.e. if they are deemed to be primarily a means of financing the acquisition of a capital asset whose ownership risks reside with the public sector rather than the private sector operator).

That only applies to a very small number of PFI contracts, with the public sector's total finance lease liabilities put at just £5.2 billion at the end of 2009.31

In contrast, the Treasury's estimated capital value of the various facilities built or being built under PFI contracts now stands at £56.5 billion.

And if those facilities had been built under the traditional approach, directly funded by Government borrowing, all of that would appear in the official measure of Government debt. Moreover, because PFI projects are funded by privately raised money, which is always more expensive than gilt funding, it is likely that the overall cost is actually somewhat higher than implied by the £56.5 billion estimated value of the facilities themselves.

Ideally, we wish our real debt figure to include the liability in respect of the capital facility, but to exclude the liability in respect of future services.

Unfortunately, PFI contracts are paid for via a unitary charge – that is, a charge that doesn't distinguish between the cost of the capital facility and the cost of future related services.

So we can't properly identify the element of our PFI liability that is real debt in the sense we have defined it.

That is why for our main estimate we include just the liability in respect of the capital value of the facilities.

It will understate the true liability because it excludes the cost of finance, but it's the closest we can get.

For reference we have also calculated the capitalised value of the unitary payments (see Table 3 at the end of the report).

Our data on PFI capital values and future payments is sourced from HM Treasury.32 For each year we have identified the capital values and future payments associated with projects that had reached financial close by that year-end. Future payments for each of those projects have been discounted using the average market yield on long maturity index-linked gilts for the relevant year.33 The outstanding liability in respect of capital facilities has been calculated to reflect the proportion of each project's total service payments already made in previous years.

Table 2: PFI Liabilities in £billion

[1] First Column: Liability in respect of capital facilities

[2] Second Column: Total liability including service element

2000-01  :    12.4      69.22001-02  :    13.9      72.82002-03  :    16.9      85.72003-04  :    21.0      102.72004-05  :    23.2      117.02005-06  :    27.6      143.92006-07  :    32.7      156.42007-08  :    39.9      180.72008-09  :    40.2      193.12009-10  :    42.8 	* 207.6

As can be seen, in 2009-10, the total liability in respect of the unitary payments amounted to over *£200 billion – a staggering FIVE times the liability in respect of the capital facilities.

And that total has tripled over the last decade.

So although we do not include those higher numbers in our debt total, PFI has nevertheless imposed a substantial contractual commitment on future taxpayers.

Finally, as already mentioned, a small element of the PFI liability is already included in the official figures for public sector debt. To avoid double counting we have excluded that element from our overall PFI total included in the real national debt.

On Gordon Browns orders, the government, up to 2007 signed more than 750 public sector deals with private companies using PFI.

Including:

64 out of 68 hospitals in Browns first 8 years as chancellor. As were 230 new schools, 185 new hospitals, health centres, 43 roads and bridges

Debt acrued by 2007, owed by government to private companies was in excess of £55Billion. [All basically hidden]

By the time Brown stopped being Chancellor he had lumbered £54billion in debt just for the cost of buildings onto the taxpayer.

[in reality, to repay that debt will be closer to £160Billion]

Governments can always borrow money more cheaply than private companies.

But Brown chose not to do this, as It was PFI which enabled Brown to keep public borrowing below 40% of GDP. An accounting Fiddle. Which enabled him to keep public spending off the governments 'current account' books.

Allowing him to fool the public, and pretend he was a financial wizard

The bankers who financed these deals walked away with absurd profits.

One group of Bankers/Finaciers walked away from one PFI deal with 662% profit. The equity in the rebuilding of the M40 has been sold at least five times. With different building contractors making huge profits. One company sold a prison for six times what it had paid. Etc, Etc....

If Brown was in business he would have been bankrupt in months. The only people who made money out of this were the bankers and financiers. The taxpayer has been royally screwed.

Many roads and bridges which were owned, ALREADY paid for by the taxpayer, prior to Browns stint as chancellor were then sold off to private companies, on the quiet, who now charge us for using them.

Point being Brown, as chancellor, using PFI has spent all the money, was selling off the family silver, on purpose, knew what he was doing, and it still has not even begun to be repaid.

Instead of accepting some pain around 2003, and a correction, he stuck the knife into us even further.

[instead of admitting to the bubble, he moved the housing inflation figures from RPI to CPI.]

People forget what PFI was intended for:

Big, capital projects with a relatively high level of uncertainty and risk - such that it would be unacceptable to leave the taxpayer with the bag if things went sour.

The epitome of PFI was the Channel Tunnel. [under the Tories 1987-1993] A risky venture, as the scale of engineering work was in uncharted territory, with enormous cost. The govt of the time set it up as a PFI scheme - so that the private sector, in the form of Euro Tunnel, would finance and oversee the construction. Investors were attracted as the venture looked attractive at the time.

As it was, the project went massively over budget and was completed late. Euro Tunnel collapsed and the investors took a massive haircut on their investment. However, taxpayers were protected from the spiralling costs, which was one of the key drivers for selecting PFI for this project.

For more conventional infrastructure and state operations, PFI is less suitable due to the higher costs and lower control, which are not outweighed by the risks of the projects. E.g. building a school or hospital is not a high risk project - projects on this scale can be managed fairly easily and the costs predicted accurately.

The problem has been a breathtaking level of misuse of PFI for low-risk projects, which can be more cheaply and more effectively provided by conventional government procurement. And, most galling of all, the bailing out of bust PFI private sector firms because their projects collapsed due to financial mismanagement. Not only had the tax payer paid a high price so that the private sector could take the project risks, Gordon simply took the risk back when things went bad - completely undermining the whole point of PFI.

PFI was just a massive hire purchase scheme which allowed brown to keep public spending, mainly infastructure off the books. AKA Fraud.

And acrue debt, to be passed onto the next governmnet. And future generations. It makes you think, it must have been Labours plan all along.

Edited May 16, 2011 by Dan1

[Milton]

It was actually Mussolini that came up with the idea of PFI.

Thats interesting because there are a number of similarities between The Labour Party and Italian Fascist Groups.

Fascists seek to organize a nation according to CORPORATIST perspectives, values, and systems, including the political system and the economy

Fascists tend to support a "third position" in economic policy, which they believe superior to both the rampant individualism of laissez-faire capitalism and the severe control of state socialism.

TRIPARTITE SYSTEMS are one of the most prominent forms of corporatism. Economic TRIPARTISM involving negotiations between business, labour, and state interest groups to set economic policy.

Italian Fascism and most other fascist movements promote a corporatist economy.

The Disastrous Way Brown Mis-used PFI is a perfect example.

[Jimmer]

Thats interesting because there are a number of similarities between The Labour Party and Italian Fascist Groups.

Fascists seek to organize a nation according to CORPORATIST perspectives, values, and systems, including the political system and the economy

Fascists tend to support a "third position" in economic policy, which they believe superior to both the rampant individualism of laissez-faire capitalism and the severe control of state socialism.

TRIPARTITE SYSTEMS are one of the most prominent forms of corporatism. Economic TRIPARTISM involving negotiations between business, labour, and state interest groups to set economic policy.

Italian Fascism and most other fascist movements promote a corporatist economy.

The Disastrous Way Brown Mis-used PFI is a perfect example.

Il Duce once said, "Fascism should more properly be called corporatism because it is the merger of state and corporate power."