Martin Hannan: No end in sight to PFI pay-offs

When I first moved my family to the suburbs of south Edinburgh, one of the attractions was the huge green field just across the way, through which a path ran that was ideal for a stroll in the sunshine.

It was so attractive that there was even a holiday caravan park adjacent to that field in the lea of Craigmillar Castle.

Then one day – it seemed to happen very quickly – somebody planked a huge big hospital right in all that greenery, with the caravan park compulsorily purchased and its owner summarily moved on. So much for the Green Belt, but hey, a new Royal Infirmary was needed and the whole shebang arrived thanks to a complex deal that is now known as a Private Finance Initiative, or PFI for short.

News readers will be aware that the Consort group which put the “private” into this particular PFI has been the subject of some complaints, not least because of the incident in which an operation had to be concluded under torchlight because workers switched off the power supply.

I’m told the litany of complaints about Consort’s input into the ERI are long and detailed, but let me give the Health Board some free advice – forget about making them pay for their inadequacies, because they have better lawyers than the public sector and it will be many years and millions in court fees before anyone actually hammers the private sector firms involved in PFI arrangements.

There’ve been other names for PFI, but for sake of clarity we’ll stick to those three letters to describe all the private-public “partnership” deals which have left the health service and local councils facing huge bills for decades to come. And when I say public authorities paying out, I mean taxpayers, because ultimately it all comes out of our pockets.

In some cases, such as the ERI, even when a billion quid or more has been handed over, the buildings will still not belong to the public, which is just one of the reasons why I long ago concluded that PFI stood for Painful Foolish Idiocy.

The Tories might have started the scam under Margaret Thatcher, but it was Labour under Tony Blair and Gordon Brown which made PFI the only game in town for investment in the public services.

Schools, hospitals, even parts of the armed services, have been funded by PFIs, and over the years the mantra of the PFI arrangers was “there is no other way to do this” usually coupled with moans about there being no money in the public kitty.

Yes, decades of under-funding had left the national infrastructure in tatters, but the normal method of paying for public investments – Government borrowing – was still valid and in any case, all that rubbish about Governmental “lack of money” went out the window as soon as the banks needed to be bailed out.

The Coalition in Westminster is still allowing PFIs of one sort or another to continue, thirled as they are to a policy of backdoor privatisation of the NHS in England and Wales. They should be stopped now, because UK taxpayers are getting a raw deal from PFI.

As far as I know, only one publication in Britain has consistently charted the failings of PFI from the beginning right up until now. Sadly, it was not a major newspaper that Labour and the Tories might have listened to, but Private Eye. Its editor, Ian Hislop, has done the nation a service by maintaining the magazine’s stance over the years, because now if anyone wants to see just how bad the PFI process has been, they can just look through the back issues of Private Eye, as I did recently.

Honestly, some of the stories from across the UK would make you weep, and even if Private Eye has exaggerated the amounts owed, there is no doubt that the public purse will be paying way, way over the odds for existing PFIs for decades to come.

In some cases, especially in regard to local authorities, it is very difficult to avoid the conclusion that while no one broke the law – or at least got caught – many politicians and public servants allowed themselves to be corrupted in the rush to get private finance into their domains.

I am not suggesting for one minute that any such corruption took place around the ERI deal, but you have to ask at what point did somebody not do their sums and work out that in the long run it would have been cheaper to have the project financed by central government funds.

Yes, it would have contravened Gordon Brown’s infamous limitations on public sector borrowing, but as I noted above, that all proved to be so much tosh the minute the banks needed our dosh.

The Scottish Government has set its face against PFIs, though it accepts that there is a place for private investment in the public sector. There needs to be a convincing argument for that investment, however, and any future deals must pass this test: what is cheaper in the long run?

What the ERI saga teaches us is that the original Tory philosophy of “public bad, private good” which Labour adopted has utterly failed the entire UK. The trouble is that we are stuck with PFI’s ramifications for many years, and that should make us all very angry indeed.