The government’s commitment to privatisation is putting schools, hospitals and the care of the vulnerable and elderly at risk—and it is costing us on average £8,400 each.
The government’s Private Finance Initiative (PFI) scheme is the main way that it funds the building of new hospitals and schools.
A new study of 641 PFI projects by the GMB union reveals that we are locked into paying out £250 billon on PFI projects that are only worth £64 billion.
The PFI debt is equivalent to £8,400 per person who pays tax.
A regional breakdown shows that Scotland is making the biggest overall loss. It has debts of over £30 billion on PFI assets worth £6 billion. That is equivalent to a PFI bill of £12,000 for every taxpayer in the country.
Wales, meanwhile, has the biggest debt balloon. It owes more than six times the value of its PFI assets.
For the government, a key advantage of this method of privatisation is that the debt resulting from PFI projects does not appear on its public spending balance sheet.
It is obvious who else benefits from PFI—the private sector contractors, their shareholders and investors. Winners include big banks, accountancy firms, construction companies and private equity firms.
The losers are ordinary people.