Andy's Blog

A Blog about me, Andy. The name says it all.

Tuesday, August 15, 2006

PFI & Single Mums on Channle 4 last night...

Last night (Monday) channel 4 had two excellent documentaries.

The first was about PFIs and basically how they're rubbish and are screwing the tax payer out of hundred of millions of pounds, whilst making a few men very rich.

Basically, the government wants to build new hospitals and things, but it can't borrow the money because that would screw the finances up. So, it asks private companies to take on the building project and take on the risk. The private company gets a loan. Now, because it's a private company and a risky project (apparently, I don't see how), banks charge them a high interest rate. If it was the government taking the loan, it would get a lot lower rate because the government always pays up. So, to make it worth the private company's effort once the building has been built, the company gets a 30 year contract to run the building and provide services, e.g. cleaning and school meals. Fine and dandy.

The problem comes when the company decides that it wants to screw money out of the public and deliver the services at a lower cost. Hence, you end up with a situation where it costs £450 to put up a shelf. PFIs are operated through a laberynth of sub-contracting, meaning that complaints are hard to negotiate.

In the end, the government ends up paying 5 times as much as it would have done if it had taken out the loan in the first place. How is this sensible?

Also, PFI companies make a killing on refinancing the project. Once they have built the building, most of the risk is over, so they can refinance their loan with the bank and make millions of pounds in reduced interest rates. Also, very few of these companies are paying tax through nice corporate tax loop holes.

The contracting that has gone on to set up the PFIs is vastly in favour of the companies and in most of the cases have locked the government into massively expensive deals that go on for decades with no room for negotiation.

What's more, the PFI company can sell the contract to who ever it likes. So even though it may have been good at providing services, it can sell it to someone who's crap and the government can't do anything.

The documentary lined up university professors, people from the kings fund and front line serivce providers who all unanimously said that PFIs are a waste of money.

I think the programme was exactly right. How can we have a system that just lines the pockets of big business? All PFIs have proved is that the government, with all of its waste and rubbishness, is still the best body to provide public services. Anything else will simply line the pockets of already very rich men. All business is interested in is extracting profit. This is fundamentally at odds with providing public services. There can never be a partnership between business and the public sector on public service provision.

Secondly, there was 'Pram Face' about two young single mums. It was an excellent show which really showed that young working class mums can be clever, articulate, witty, strong, resourceful, responsible and nothing at all like Vicky Pollard from Little Brittain. Working Class culture has been vigourously attacked now for a few years. It refreshing to see efforts which attempt to bring some reality back to the situation. (Although one of the mums called her son Harlen, what sort of a name is that?!)


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