In what will probably be the final [directly] SSTA-related speech/blog post, I’m ending with the first speech I made at an SSTA Congress. It was the last motion discussed in 2002 and I had the graveyard slot at the end of the day when everyone was wanting away and home.
My motion called for the ending of PFI, and here is as close to the text of my remarks as I can provide. As the Conservative government sells off more of the state’s assets and continues with austerity, it seems timely to recall it.
Congress, the case against PFI rests upon three simple grounds:
First, it was corrupt in its inception, second, it is uneconomic in its operation, and third it is damaging in its effects on our public services.
Put simply, It means jobs for the boys, profits for the city and privatisation for our schools – and all at the expense of our pupils.
The Private Finance Initiative is one of a whole host of schemes which under the guise of benefiting the public sector plunder it.
As reported by Paul Foot on channel 4:
PFI in the UK was the brainchild of a committee set up under the Tories in the early 1990s. A key member of which was the deputy managing director of General Electric – a man called Malcolm Bates.
Despite being vehemently against PFI before the 1997 election, after it Labour brought in a top businessman to advise them on PFI and came ‘round to his views, he was …Malcolm Bates.
A whole series of further PFI schemes were launched one of the largest of which was the Edinburgh Royal infirmary. It was built by a consortium including BICC, who’s Board was joined by… Malcolm Bates. Indeed, so happy with him were the government, that Malcolm soon became Sir Malcolm.
It’s just one example amongst many of people advising or promoting PFI to the government who after the deal’s been done, end up working for the beneficiaries.
PFI allows the few to get their snouts in the trough – it’s only the start of the scandalous waste of public money that is the Private Finance Initiative.
Even though the projects involving schools are relatively new on the scene, the lessons from these and from other parts of the public sector are clear for all to see.
The first waste of money is the fact that for a private consortium to borrow money it costs more than it would for the government to do so. Then come the set-up costs for the private sector including millions being spent on financial and legal advisors; prominent amongst which are our job-sizing friends at PriceWaterhouse Coopers.
PFI supporters insist that it presents a cheaper alternative to the public sector due to the risks involved in building and running facilities being transferred to the private sector.
However, the reality is of the manipulation of comparisons between public and private in order to create a false impression of value for money. In the case of the Glasgow schools contract, Unison has pointed out that the risk factor of building by the public sector was calculated at £70 million to cover up the fact that the council would be paying nearly £35 million more by going down the PFI route.
In the case of the Edinburgh Royal Infirmary – the full business case presented by the NHS trust did not even bother to compare project costs on a like for like basis. The effect of this according to independent analysts will see the project costing an extra £6 million per year over the next 15 years.
The recent controversy involving the PPP scheme to privately build and operate 3 prisons in Scotland show clearly the attempts of the Executive to pretend that there are substantial savings to be made in pressing ahead with PPP.
The clams of a £700m gap between public and private provision were rubished by independent analysts who cut through the biased assumptions of the PPP scheme.
In any case, the estimated private costs soon change after the deals have been done. In the Glasgow schools project the year one accommodation costs grew from an initial estimate of £24 million to over £36 million.
Fundamentally, risk is not transferred to the private sector as if a project fails the public sector will have to bail it out. Witness the additional funds needed to complete the new air traffic control system. Witness as well the additional funds needed to properly install computer systems for the immigration service, the passport agency and now, the Child Support Agency. Witness PFI and witness a total waste of money.
Incredibly though, when a council believes that a contract should be terminated due to the private sector not keeping to its side of the bargain – it has to compensate the PFI contractors for contract termination – even if the PFI consortium are to blame!
When you add in the fact that private companies are out to maximise profit – the costs of PPP rise even further above public sector provision – and all for the sake of transferring public assets to the private sector.
PFI is backdoor privatisation which puts profits before prisoners, profits before patients and profits before pupils.
PFI supporters insist that PFI is the only deal in town but Congress, under PFI rules if a council goes to the Executive saying that it wants PFI because it doesn’t have any alternative – they would be barred from obtaining PFI in the first place!
PFI supporters also say that its the only option, as the money would not otherwise be there to pay for these projects. But Congress, the current account surpluses of recent years are much greater than the value of the PFI deals which have been struck. The money is already there its just not getting used to provide better public services.
There simply is no economic case for PFI – but it’s the damage to public services that is the final part of the overwhelming case against PFI.
In order to make their costs less than the public sector, corners are cut.
Any cost savings can only be made from reducing the quality of the resource, the service provided or the conditions for the workers,
In our prisons it will mean less rehabilitation schemes – and an increase in crime. In our hospitals it means less beds and higher waiting lists. In our schools it means less facilities and more stress for teachers.
In hospital PFI projects an average cut of 33% in bed numbers has been made, in school projects facilities are cut back. In the Fife PFI scheme already, the consortium are putting old equipment in the new schools.
PFI brings the promise of the new but delivers the reality of the old.
The increase in the accommodation costs in Glasgow alone has resulted in the loss of seven swimming pools, many classrooms and many staff common rooms.
We are seeing more buildings with less facilities – and are paying for the privilege. Indeed this is further compounded by stories coming from those working in the new facilities that the basic fabric of the new buildings is not up to much in the first place.
The contracts last anything up to 30 years but the needs of communities in relation to school buildings has changed greatly over the last 30 years, who can say with confidence that they wont change radically over the next 30? But PFI forces us into inflexible deals over the long term.
Rather than investing in public services, PFI seeks to privatise them. Rather than investing in the future, PFI mortgages it. Rather than investing in value for money, PFI wastes money.
PFI puts public money which should be spent providing better education into the hands of profiteers. But it doesn’t have to be a choice between PFI and leaky windows between PFI and crumbling buildings, between PFI and poor resources.
There are alternatives to privatisation which are economic, viable and indeed desirable – they simply involve the government moving away from its dogmatic desire to line the pockets of the private sector at the expense of the public.
Putting money into the troughs for the snouts of the private profiteers cannot be, never has been and never will be in the interests of public services.
Congress, the pupils in our schools must come before the profits of big business.
The executive must put education before profit.
The chancellor must think again and get rid of these PFI schemes before they do any more damage that they’ve already done.