Wednesday, May 28, 2008

What does the F stand for?

I thought I might just mention this in case anyone has not read Private Eye in a while. You see, in a recent copy they had an interesting observation about how Mussolini ruined the economy of Italy by borrowing lots and, in order to get things like roads built, went to private business and struck a deal for them to build it and the Government would pay them back each year by installment. This meant that the total debt and cost of the projects were not on the balance sheet and so the economy appeared in much better health than it actually was. It was fascist economics at it's very best.

Those with a keen eye might right now be thinking 'oh my doesn't that sound familiar and awfully similar to Brown's PFI strategy?' and you would be right to do so. It is exactly what Brown as Chancellor has done to the country. The F in PFI as Private Eye noted might in fact stand for something other than 'Finance'. Food for thought huh? Ciao!


Howard said...

Well said and well put. I trust you have not fallen for Denis MacShane's article in the DT yesterday. Dale and the BBC have. I trust you are rather more street wise.

cassander said...

The 'F' stands for 'fascism', and that's how you spell it. Please try using a spell-checker - your posts are great but the enjoyment of them is severely reduced by the typos!

Ciao! [sic]

Anonymous said...

Hmmm, Mussolini's economic policy may have left a lot to be desired, however, I think overseas misadventures in Albania, Libya, Abyssinia, Eritrea, Somaliland, Spain etc., culminating in WW2 may have had a slightly more detrimental impact on the health of the Italian economy.


Anonymous said...

PFI was a Tory initiative.

Its built 3 new hospitals locally, valued at 100's of millions, including a Children's Hospital and a new cancer unit with I think 6 linear accelerators costing millions each. They will be fully maintained and serviced for 30 years for the repayments and then handed to the NHS in top condition.

This may be bad - but explain to me how.

Normal procurement would not have made the money available and even if so then in terms of fees would have attracted at least 15% professional fees.

I am a Tory voter - all my long life. I despise Gordon Brown.

Tell me where the Tories were wrong to introduce PFI. Put a price a value a cost on treating cancer patients NOW rather than in 10 years time.

If you have a criticism of PFI why not voice it with some accuracy with some knowledge rather than fatuous snivelling false analogies. And tell us how you would provide the services otherwise.

dizzy said...

Cassander, I posted from a phone and cannot spell check. Sorry about that.

As for PFI being a Tory strategy, absolutely right, it's bloody stupid and it makes debt off balance sheet. That is a bad thing.

Anonymous said...


True, PFI was a Tory initiative but it was then used a means of introducing the benefits of competition into the public sector.

One of the key reasons it was taken up by Labour, however, was it provided a neat trick for a government committed to tax and spend, but concerned about political damage from that position.

PFI was off the balance sheet and off the PSBR, therefore, Brown could dress himself up as a cautious and prudent chancellor.

Most true Conservatives and a lot of economists thinks it's a bad thing that the public sector sucks up a large proportion of available capital at the expense of its more efficient use, arguably it is admitted, by the private sector.

As for the effiency of the PFI as a means of investment, there is a difficult case to be made.

It has always seemed dubious at best that PFI schemes for hospitals and schools came out financially more advantageous than state options in comparative evaluations.

How could a private option - paying a couple of points over base - be more efficient than the state with access to prudential borrowing?

It's difficult to argue with the social benefits you report from the immediate provision of refurbished hospitals and schools.

But there have been enough critica reports of these schemes to suggest claims for their efficacy should be treated with caution.

It is unclear whether big central hospitals are the way to go at a time of rapidly changing technology. Under PFI, you are lumbered with what could turn out to be white elephant for the next 30 years.

So too in schools. Many users have found the design and build approach has left teachers with a facility badly designed for their needs and difficult to change without financial penalty.

There is one killer piece of information which should at least raise a concern about PFI. This is the primary and secondary markets in PFI contracts which have shown staggering increases in valuation over the last ten years.

The increases must be a clear signal that PFI vehicles were woefully mispriced; in other words, the state, and the punter, was well and truely screwed.

Jonathan M. Scott said...

PFI could have been good. And it's allowed hospitals and schools to be built NOW.

But ... you have to pay for them at exorbitant rates later ... meaning that when our children need new hospitals (and schools FOR OUR GRANDCHILDREN) it will be incredibly difficult to fund them.

Tories introduced it but Labour has spent the past 10 years building up enormous debts, which will come back to haunt us.

Anonymous said...

Perhaps this will persuade Guido to read the Eye?

Anonymous said...

PFI's last for 30 years, payments are budgeted for, and then are given back. BTW - Every conventional contract new build has to pay 6% back to govt in 'capital charges' - PFIs do not .

They may be wrong but I read no coherent evidence for that - just vague 'off balance sheet' talk. The cost are paid out of whatever current allocations the govt provide. Do you want hospitals? Do you want schools. More to the point do you want these buildings to be properly maintained?

Conventional building procurement takes too long causes too much conflict causes too much redesign too much time and cost over run and too many claims and legal costs.

Meantime people die.

Its fair to say that schools require more human investment than physical but have you seen the decrepit nature of the estate?

But whatever - just leave the fascist bit out eh? And recognise there is a case to be argued - we know its a given that Brown will cock up anything he touches. I can guarantee the Tories will not scrap PFI - they, no one, can afford to.

dizzy said...

What exactly is your point? Do you think I;m going to stop mentioning what a idiotic waste of money PFI is to the state if the Tories get in and carry on using it?

Anonymous said...

spell check dizzy? don't you know how to spell fascism without a spell check? peculiar.
also are you still ill?

dizzy said...

I dio and I don't. I've said it many times in the comments, I have mild dyslexia but I am forever looking at the word and wonderings where the "s" is meant to be.

curious bystander said...

Trevor: I do not pretend to know very much about PFI and its workings, but can you please explain why so many of the PFI hospitals appear to be so deep in debt - which they all appear to blame on PFI? Thank you.

Bill Quango MP said...

How's that PFI contract going...
Still going well?

Didn't I read somewhere that

"the taxpayer looks set to pick up the bill for Metronet's cost overruns, estimated at over £1bn, as well as potentially having to pay off the company's creditors to the tune of £2.6bn"

I'm sure it was a one off. After all this government has no track record of cocking things up, does it?