Sunday, June 26, 2011

This will cost most than 1000 times Greece

PFI Profits

This was the Labour initiative. Where we pay 20% returns for 30-40 years for investments on Private sector funded Govt projects. The conservative outgoing for coming 30-40 years is almost equal to pensions outlay. We neither have money to pay pensions. Not even this. Note none of the above future payments are on govt. books. Labour did more damage to public finances in 14 years what successive govts. have done on pensions in more than 60 years.

Posted by deepak @ 05:02 PM (1906 views)
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12 thoughts on “This will cost most than 1000 times Greece

  • Is the slightest possibility these debts could be written off by a determined politician as odious? It seems like a rancid method of funding schools and hospitals.

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  • PFI was introduced by John Major in 1992… the Labour Party carried on with it after 18 years of Tory Party underfunding which preferred to give “tax incentives” to their wealthy supporters rather than maintaining schools and hospitals. Government debt before the 2007/8 credit crash, was around 40 percent of GDP and the Tories at the time were pledging to match Labour’s spending. Even after the sub-prime lending crisis hit, at the time of the last election UK government debt was better than most Western countries.
    Our debt since the last election, despite Tory tax rises and cuts – or perhaps even because of them – continues to rise.
    As BoE governor Mervyn King said, our massive increase debt post-2007 is a result of Labour doing everything it could at the time to bail out the financial sector – something the Tories would have done too… and, indeed, they continue to do.

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  • Just a quick add: Despite being so critical of PFI while in opposition and promising reform, once in power George Osborne progressed 61 PFI schemes worth a total of £6.9bn in his first year as Chancellor.

    http://www.guardian.co.uk/politics/2011/apr/18/george-osborne-backs-pfi-projects

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  • I’ve never believed any of the reported benefits of PFI. It is a bad way of providing public services and Labour should have dropped it like a stone after inheriting it from the Tories. I can understand the new lot carrying on with it as it suits their ideology but Labour should never have gone near it – they had 14 years in which to prove that traditional government investment was a better way of providing these services. I understand that the Tories want to give money to their mates in the private sector etc. but don’t understand why Labour embraced the idea.

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  • @alan: ‘I understand that the Tories want to give money to their mates in the private sector etc. but don’t understand why Labour embraced the idea.’

    Because the problems of chronic underinvestment in schools and hospitals needed to put right urgently and there was insufficient government cash to do it?

    Contrary to what the Tories will have you believe, they didn’t leave the UK in great state in 1997 – hence the Labour landslide, which IIRC, was by the widest margin of any general election in the UK. That said, I don’t see why, once things were looking up, a gradual phasing out of PFI wasn’t pursued – a bit of complacency crept in, perhaps?

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  • But with hindsight it may well have been better to spread the investment out over 14 years and for it to have been sustainable rather than splurge on PFI in what you correctly say was a short time scale. As taxpayers, we’d have got more value for money than we have with the PFI legacy. I suppose that’s politics for you… short termism is uppermost in their minds.

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  • Politics is about giving people what they want without really telling them how it will be paid for (apart from we won’t put up your taxes).

    4-5 year terms let you brush things under the carpet, and PFI falls into that category.

    Pensions, now there is another issue that has been tossed into the long grass time and time again. The ‘demographic timebomb’ was flagged back in the 80s and 90s, but of course ignored by everyone (let’s have a Royal Commission, that will delay the decision until the next election). Now we have got to the point where the Tories are holding the parcel when the music’s stopped, and they have to be the bad guys. But this has been coming for years (decades).

    I don’t think that the pension reforms are fast or big enough — but if you have no idea of life tables and expected costs you will be angry. But the world is changing in two ways — we live longer and have a smaller influence in the global economy.

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  • Agreed – started by the Tories in 1992, so a good 5 years before Labour took it on in 1997.

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  • mark wadsworth says:

    Aha, I have a plan for this once I’m in government. You have to remember that there is a difference between private law and public law.

    If the UK government has signed up to a private contract, then it is very difficult for a future UK government to wriggle out of it. but the UK government can amend public law (e.g. tax rates) as it pleases.

    So while VAT, corp tax, income tax etc will be scrapped* as a general rule, there will be a little clause saying that this does not apply to income arising under a contract entered into before enactment. So yer average private employer can novate all his employment contracts etc a week later to ensure that no more PAYE has to be withheld. But the government will simply refuse to novate PFI contracts (or contracts paying civil service pensions), so they will still be liable to VAT, corp tax, income tax etc, which will be rolled into a new flat rate of 50% of gross income or something.

    * And replaced with Land Value Tax. So the PFI people will get clobbered at both ends. In the end, the PFI vultures will be offering to pay the government vast sums of money to release them from their unprofitable obligations under those old contracts.

    Sorted, next problem please!

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  • MW you have my vote! Where do I sign?

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  • mark wadsworth says:

    Dude, ta, you can’t currently vote for me but feel free to nick my ideas and get people to vote for you.

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  • @mark wadsworth said…
    Why are they not able afford now or for the past 15 years..
    When you over do on the taxes the compliances of tax falls and you get less taxes in.

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