1. The Private Finance Initiative (PFI) really constitutes privatisation by stealth. Privatisation is the transfer of public assets to the private sector; and giving the private sector contracts to build new public infrastructure, which they then own, has precisely this effect. It is seen as more politically acceptable for a Labour government to do this than to transfer existing assets under a more traditional form of privatisation.

2. The arguments used by the government to support it are all completely bogus:

a. The government claims it improves the public finances. But renting the new infrastructure from the private sector costs far more than simply using taxpayers' money to fund it. The new hospital in Edinburgh would have cost £180 million had it been built using taxpayers' money, but was instead built under PFI and rented back from the private sector at a cost of £30 million per year for 30 years, increasing with inflation, £720 million more than it would have cost if funded directly by the taxpayer. (1)

b. It is claimed that it can get investment for projects which would otherwise not be funded. But the lack of funding for public projects is merely due to Treasury rules.

c. The government claims it is more efficient. But the efficiency comes from cutting corners with costs - eg employing fewer people and making those who remain work even harder. This cannot be a solution when, for example, "More than a third of nurses in England are planning to leave the Health Service within a year because the work load has left them 'emotionally exhausted'." (2) Public servants everywhere are exhausted and demoralised. The true purpose of PFI is to reduce the terms and conditions of workers in the public sector. Privatising hospital cleaning has already resulted in the workload of cleaners increasing so that hospitals are so dirty that many patients acquire infections from hospital stays, and about 5000 a year die as a result.

d. The PFI is often portrayed as a way of getting private funding into the public sector. But private companies don't become involved for altruistic reasons, only to make a profit, and that profit must come from cuts in services. Government consultants have calculated that every £200 million spent on the PFI leads to a loss of 1000 doctors and nurses. (3)

e. The government wants to keep public spending and borrowing down to avoid alarming the City, but if the government were to use the General Government Financial Deficit, as many other European countries do, this would not be a problem anyway, because it would not be on the public accounts.

2. The reason the government has been able to gain acceptance for so many PFI schemes is that they are often portrayed as the 'only game in town'. This also results in greatly increased costs. The government has often told Health Authorities that the only way improvements will be funded is through the PFI, so schemes are deliberately made more expensive so that profits will be large enough to attract private funding. (4)

Notes
(1) Dr Caroline Lucas MEP, Watchful in Seattle, published by The Greens/EFA, European Parliament, November 1999.
(2) MORI Poll Digest, 11 May 2001.
(3) George Monbiot, The Guardian, 21 December, 2000.
(4) George Monbiot, ibid.

Published and promoted by Spencer Fitz-Gibbon for the Green Party, both at 1a Waterlow Road, London N19 5NJ.