By Ranjan Balakumaran @FinancialEyes
Jeremy Corbyn’s Labour Party needs a concrete solution to resolve billions of pounds of New Labour’s Private Finance Initiative (PFI) debts, according to Dexter Whitfield, a leading PFI research expert.
PFI was conjured up by John Major’s Government but deployed by New Labour on a grand scale. At their core, PFIs are a means of financing public infrastructure projects with private capital.
However, the controversial procurement method has long been the target of criticism suggesting that the real motivation behind these ‘public-private partnerships’ are far murkier than the government lets on.
Furthermore, considerable evidence has emerged that overcharging on PFI projects has meant the British taxpayer has given away billions of pounds to the Private Sector when government itself could have borrowed more cheaply by issuing its own bonds.
According to their critics, PFI schemes are little more than accounting tricks by which borrowing is taken off the balance sheet so the government is able to hide the true cost of their borrowing.
However, though Corbyn has distinguished himself in speaking out on PFI in the past, no major politician has yet laid out a concrete plan to tackle these toxic deals by investigating, prosecuting or jailing PFI fraudsters — let alone recovering the proceeds of crime.
We are informed that Corbyn’s office will be releasing PFI policy later in the campaign but refrained from commenting when approached.
PFI researcher and expert Dexter Whitfield’s full statement is as follows:
“The TES article on the operational costs of PFI school contracts again highlight the financial scams employed by PFI contractors to maximise their profits at the expense of education and healthcare.
“But it also exposes the fundamental structural and financial flaws in PFI projects which have become an albatross for schools and hospitals – high debt burden, offshore profiteering and weak accountability.
“Interserve’s new PFI schools contract in Wales illustrates how PFI rolls on unabated.
“We cannot continue to expose the flaws in PFI, have a review and do nothing. More radical action is essential for which there is wide public support. The public cost of PFI buyouts, bailouts and terminations plus the extra cost of private finance and higher PFI transaction costs is £28bn – enough to build 1,520 new secondary schools for two million pupils.
“I strongly recommend the People v Barts PFI campaign proposal to nationalise the Special Purpose companies that build and operate PFI projects be supported and developed by the Labour Party.”
