It's well known that the Government has some favourite IT providers for it's multitude of projects (some failing, some succeeding). Most of the big contracts are done under Gordon brown's favourite tool, the Private Finance Iniative, which results in their costs not really appearing on the balance sheet. It's also generally accepted that if these cost were put on tothe balance sheet the situation would look very very bad for the Government finances, which, incidentally is exactly why it's right not to start promising tax cuts before you get into power.
Take for example the Department of Wrok and Pensions. Last year alone, it paid out a staggering £753,313,000 on its many PFI projects (the previous year topped a billion). The PRIME PFI contract which provides facilities management via a company called Trillium (Prime) Ltd, alone cost £517,671,000. Meanwhile, IT services provided by EDS received £80,647,000, and, since 2002 have received a total of £341,966,000. If that is just from one department imagine how much they manage to get across Government that's off the balance sheet?
5 comments:
Surely PFIs are kinda like Lease-Buys, HP Agreements, or Mortgages. You/we are getting access to annual payments in the various public accounts. The full build or contract costs are often/usually (?) available one way or another.
If any entity lease buys an asset the amount of the lease appears within an item in the P&L and then at 25 years or whatever there will be a final payment and the asset will transfer at its market value.
If it's lease or rent the thing never gets on balance sheet. That's accounting for you. It is not particularly a case of a poison chalice in the public finances. It's just business.
I don't like PFI one little bit. But surely it is a Tory/Corporate trick? One that would certainly continue under the Cuddly New Tories?
Next week's File on 4 has the working title of "Is a PFI crisis looming?"
"But surely it is a Tory/Corporate trick? One that would certainly continue under the Cuddly New Tories?"
The tories have pledged to create an independent statistics body, nullifying off-book wheezes like PFI.
The answer to next week's File on 4 may well be "NO!" after a week of trailers and an hour of red herrings and so on. Or it might be "YES, BUT only if the Tories get in and start messing everything up as usual."
Is it a Tory/corporate trick or not?
And how would an independent statistics body change the underlying accountancy?
I'm against PFIs but I do understand how the pain of my own mortgage reduces and reduces as time goes by - so long as the Tories don't get in and wreck the economy.
PS That independent statistics body was announced 14 months ago ... and surely just replaces/privatises the ONS?
Does anyone monitor the political contributions of the companies that gain these contracts? I wonder how they are staffed; could they be full of dirt cheap work-permit staff?
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