Why existing PFI contracts should be terminated as soon as possible - Yorkshire Post Letters

Despite efforts by apologists like Lord Hutton to continue to justify the system, the dire consequences of Public Finance Initiatives (PFI) should come as a surprise to no-one.

Reports of maintenance failures in schools and hospitals become more frequent as the effects of over a decade of deliberate austerity bite even deeper.

More than 30 years ago, when the concept of using private investment to build public services was created as an accounting trick - to keep the capital costs off the current accounts - these very consequences were specifically predicted by those opposed to the schemes.

Those who continue to assert that services can be improved by greater operational efficiency must be shown that such ideas are both ill-informed and deeply offensive to the workers in public services, many of whom are currently struggling at the ends of their tethers.

The arithmetic of the objections to PFI, and indeed, to any form of privatisation, is really quite simple. If the extra elements of profit and shareholder dividend are introduced into a closed accounting system, then the only way they can be met is by diminishing the amounts spent on other factors.

Since the reasons given for the changes would always also involve reducing the total public finance outlay, then this would need to come about with smaller total budgets. This originally - always - meant the overall wages bill, (fewer workers and smaller individual pay packets) but in recent years when that source has been effectively exhausted, it can only be from the basic provisions themselves.

When PFI was first introduced by the Major government and built on by Blair & Brown, the public were assured that the private companies involved were all committed to the provisions which they assumed. But as the years went by, the contracts were sold off to other companies and organisations, often based on the far side of the world, whose only and exclusive interests lay in return on capital invested.

As a nation, we no longer seek new PFI contracts; in this respect, we have seen the error of our ways. But it becomes increasingly pressing that existing contracts should be terminated as soon as possible, so that schools, hospitals and other public enterprises can properly plan their entire budgets without pre-emptive demands from faceless finance companies.