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Pfi Projects 'poor Value For Money' Say Mps

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As per the title:

http://www.bbc.co.uk/news/uk-politics-14574059

"The Treasury select committee said PFI was no more efficient than other forms of borrowing and it was "illusory" that it shielded the taxpayer from risk".

Actually it depends on individual contracts - it can be good or bad depending on the Ts & Cs. A few are bad, many are just OK and there are a few very good ones. Also, the alternatives to PFI are in many cases appalling.

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Yeah PFI is just brill, we rent the buildings from a Bank and a Construction company for 30 years and by the end of that 30 years we........................errr.............don't own the building? Even though what has been paid over 30 years was/is enough to build 10 buildings of equal size and type!

PFI is not "OK", it was and still is a huge rip off! A lot of decent schools and hospitals have been knocked down and replaced with Soviet style buildings that won't last more than 30 years!

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Also, the alternatives to PFI are in many cases appalling.

Living within our means and paying for things out of money that we've earned?

Well, put like that.....

In April, the widening of four sections of the M25 was to have cost you and me £5bn. This was already a spectacular rip-off. The Campaign for Better Transport had calculated that the same amount of extra road space – if it were really needed – could have been created for £478m. But somehow, over the past four weeks, the £5bn for widening four sections of motorway has mutated into £6.2bn for widening two. In Sicily, officials agree to terms like this with the help of dainty gifts like horse's heads and waistcoats full of fish. In the UK, the government ­volunteers them without any obvious inducement.

There's nothing remarkable about this inflation: it appears to be an inherent property of the government's private finance initiative schemes. The PFI allows consortiums of banks, construction and service companies to build and run our public infrastructure. Though the government maintains that this offers better value than using public money, in reality the numbers behind all PFI projects are rigged. While the government retains much of the risk, the investors keep the profits, which often run to many times the value of the schemes.

The public liability incurred so far by the private finance initiative is £215bn. Much of this spending (half? three-­quarters? – the deals are so complex and opaque that we will never know for sure) is pure pork fat. One day the repayments will destroy Britain's public finances. This extravagance makes our MPs look like ascetics.

But this waste will never feature on the front page of the Daily Mail – or any page at all. Though it purports to speak for the lower middle classes, the Mail serves the rentier class, which ­benefits from these deals. The issue is also so complex that it is hard to see how it could be conveyed in a tabloid story. You have only to write the words private finance initiative to lose 90% of your readers.

Across 12 years of researching this issue, I have kept running into the brick wall of public indifference. I have used every conceivable device to try to convey the scope and scale of this rip-off. None of them works. Like the academics Jean Shaoul and Allyson ­Pollock, the magazines Private Eye and Red Pepper, and the Sunday Telegraph's columnist Liam Halligan, all of whom have spent years exposing this scandal, I appear to have been wasting my time. The issue is too remote and too complex to ignite public indignation. The scheme's obscurity has protected it from the outrage now being directed towards MPs.

But just in case anyone is still reading, I'll try again. The terms offered by the new M25 scheme are so generous that an orang-utan in a suit and tie couldn't fail to clean up. The new price appears to represent the cost to the ­government of keeping the banks in the deal. The scheme is meant to be ready in time for the Olympics, but the companies involved have spun out the negotiations for so long – demanding ever more outrageous terms – that the government is now prepared to pay almost any price to get the road widened on time, regardless of future liabilities. The option of tackling the problem by reducing the volume of traffic – an orbital coach network is the most obvious solution – was never considered. When Alistair Darling was transport ­secretary, he was asked about this alternative in the Commons. He dismissed it out of hand.

One of the consistent features of PFI is that the projects are reverse-engineered to meet the demands of corporate investors. This, for example, is how the £30m public scheme to refurbish Coventry's two hospitals became a £410m private scheme to knock them both down and rebuild one of them – containing fewer beds and fewer doctors and nurses. The old scheme was too cheap to attract private money. Similarly, an orbital bus system offers only modest profits.

Last year, the Treasury promised to bring private finance deals on to the government's balance sheets, in order to meet international financial reporting standards. Most PFI schemes don't count as public debt, which is one of the reasons why the government finds them attractive. (The other is that this corporate welfare bought New Labour the support of business groups and sections of the rightwing press.) But on 13 May, at the height of the MPs' expenses scandal, the Treasury quietly reneged on this promise.

LINK

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Actually it depends on individual contracts - it can be good or bad depending on the Ts & Cs. A few are bad, many are just OK and there are a few very good ones. Also, the alternatives to PFI are in many cases appalling.

The Committee, which is chaired by a Conservative MP and has 6 Conservative members (+ 4 Labour and 3 various others), describes PFI as "extremely inefficient".

Read all about it here http://www.parliament.uk/business/committees/committees-a-z/commons-select/treasury-committee/news/pfi-report/

Actual report here http://www.publications.parliament.uk/pa/cm201012/cmselect/cmtreasy/1146/114602.htm

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PFI, it's like buying on a store card.

Yes it is! And individuals, companies, and governments have been doing it, and telling us how clever they are! :huh:

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Living within our means and paying for things out of money that we've earned?

Well, put like that.....

LINK

The whole rail network is rented off the banks in a scamming, monopolistic, PFi type deal.

That's why rail prices go up so much each year

(they craftily blame it all on the workers asking for a living wage each year)

All the actual trains are bought by banks - then leased off them by the Govt at extortionate rates (including banker profits) thru one of the bankers wholly owned 'front' middle-man companies. Ditto most of the rolling stock!

A huge monopoly with no risk, coining the cash in twice over, from supplying profits, then the middleman profits, leading to exploiting/fleecing all commuting workers.

Edited by erranta

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Actually it depends on individual contracts - it can be good or bad depending on the Ts & Cs. A few are bad, many are just OK and there are a few very good ones. Also, the alternatives to PFI are in many cases appalling.

CONGRATULATIONS!!!

I've been looking out for the post that could get me bothered to log in and reply again and you've won.

Completely rubbish post MOST are F*****G robbery, the rest are just C**P and maybe, just maybe there is one out there that could possibly be good value for money if, just if, we don't procure anything through it.

Link, detail anything please that will convince me there's a PFI contract out there that was not born out of 'old boys clubs' future job prospects, or just plain incompetence of the civil service 'commercial staff' dealing with it, I'll even accept a copy of the T&C's if you have them to hand, please, please please SHOW ME A GOOD ONE!

A VERY good one, Mmmmm, let's see what you come up with.

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CONGRATULATIONS!!!

I've been looking out for the post that could get me bothered to log in and reply again and you've won.

Completely rubbish post MOST are F*****G robbery, the rest are just C**P and maybe, just maybe there is one out there that could possibly be good value for money if, just if, we don't procure anything through it.

Link, detail anything please that will convince me there's a PFI contract out there that was not born out of 'old boys clubs' future job prospects, or just plain incompetence of the civil service 'commercial staff' dealing with it, I'll even accept a copy of the T&C's if you have them to hand, please, please please SHOW ME A GOOD ONE!

A VERY good one, Mmmmm, let's see what you come up with.

The Army is riddled from 90/s early millennium PFi - the generals long retired off the scene who signed up the semi-destruction of our armed forces networks!

One of the reasons why PFi is so dangerous with not thinking ahead (as well as paying 5-10 times an original cost in exponential interest over the term) - is that there could be a reduction in UK turnover (recession) where payments still have to be made and yearly grants are less.

This has come true!

That's why the ferkin army can't afford to send troops out on exercise - all troopers at home barracks are confined to quarters from what I read!

Edited by erranta

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It's really hard to see how they could ever be good value given the differential cost of funding. The government can fund at 4%, the best the companies behind these PFI deals seem to manage is about 8%. Let's suppose that the private sector arrangement is 30% more efficient than the public sector one (a big assumption of course), even then, the PFI deal will still cost us tax payers 40% more. Not only that, most of the deals I've read about have guaranteed minimum durations making them very inflexible should circumstances change down the line.

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The Army is riddled from 90/s early millennium PFi - the generals long retired off the scene who signed up the semi-destruction of our armed forces networks!

One of the reasons why PFi is so dangerous with not thinking ahead (as well as paying 5-10 times an original cost in exponential interest over the term) - is that there could be a reduction in UK turnover (recession) where payments still have to be made and yearly grants are less.

This has come true!

That's why the ferkin army can't afford to send troops out on exercise - all troopers at home barracks are confined to quarters from what I read!

Genius the bankers have achieved what Napoleon, Hitler etc... could only dream of defeating the British Army.

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One reason I voted SNP - they binned PFI as soon as coming to power much to liebores gnashing of teeth...

I was working for a Balfour Beatty opco when that happened...a Marketing Manager at the firm (with a BTL Portfolio) nearly shat his pants on hearing the news!

During mid 2009, we did hear a rumour that some top Balfour Beatty exec was told by some top government tw@t that "PFI is dead"...all of a sudden the firm went into "Cost Cutting" mode for the rest of 2009 and all of 2010.

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http://www.telegraph.co.uk/finance/newsbysector/constructionandproperty/8709598/Government-must-count-35bn-in-PFI-debt.html

The MPs found that the cost of capital for a typical PFI project is over 8pc – double the long-term government gilt rate of approximately 4pc.

An estimated £60bn of capital investment is already committed by private investors in PFI projects, including the building of schools, hospitals and other infrastructure projects.

When the Committee launched its investigation into PFI in March 2011, 61 new projects were being procured with an estimated investment value of £7bn.

The majority of PFI debt does not appear in official debt data. The Office of Budget Responsibility (OBR) has estimated if it were, Britain's national debt would increase by £35bn or 2.5pc of GDP.

Bargain...

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