PFI isn’t working – it’s time to end parasitic private profit

Added to the recent collapse of Carillion, the National Audit Office (NAO) has found that the public has been ripped off for years by the use of private finance initiatives (PFI) on public projects. These latest findings are another nail in the coffin for the failed ideas of PFI, privatisation, and outsourcing.

The NAO report revealed that the cost of using private financing could be up to 40% higher than if the same projects were done entirely with government money. In most cases, the report also estimated, it is unlikely that PFI-based costs were ever lower than if projects were entirely publically funded.

Carillion’s projects are amongst 716 deals that the government has contracted through PFI schemes. These contracts currently have a value of £60bn. Even if no new contracts were signed, the future charges from these contracts would still add up to nearly £200bn by 2040.

Whilst the public have had to pay for these contracts, the executives of these companies have been lining their pockets with billions of pounds.

PFI companies are not the only ones to be profiting from public services. The top nine water companies have made nearly £19bn in profits over the past decade, thanks to privatisation. The largest four of those – Thames Water, Yorkshire Water, Anglian Water, Southern Water – have been storing their profits in offshore bank accounts in the Cayman Islands. Michael Gove has threatened them with legalisation if they fail to ditch their tax havens and behave ‘responsibly’.

As we know, however, such hollow threats will never amount to anything. The Panama Papers and Paradise Papers have shown that the Tories and these executives are clearly ‘all in this together’.

Water companies are not the only utility to be avoiding tax. Most energy companies have also paid little to no corporation tax.

This is also combined with the profits PFI companies are making off the back of the NHS. Private companies have been set up to borrow private funds to build hospitals. These are then leased to the government, which has to pay back the costs over a couple of decades.

These private companies have made over £800m in profit over the past five years and are projected to make £1 billion over the next five years. 174 of these contracts have been set up, and the NHS will have to pay back £80bn for their use.

This parasitism also extends to schools. 17 schools built by PFI contracts have been deemed to be poorly built due to these companies cutting corners for the sake of reaping bigger profits.

This demonstrates that it is not a question of ‘good’ companies and ‘bad’ companies, or ‘good’ capitalists and ‘bad’ capitalists. The whole system is rotten to the core. As long as we live in a system based on production for profit, and not production for need, there will always be companies which profit from public services, at our expense.

Shadow chancellor John McDonnell’s solution to these contracts hasn’t been entirely clear. He has called for an end to these PFI contracts, but hasn’t stated what will happen to the already existing contracts. A Labour Party press release, meanwhile, stated that a Labour government would only take these contracts ‘in-house’ if it was deemed ‘necessary’.

Corbyn and McDonnell should be calling for a complete end to privatisation and outsourcing. PFI contrasts should be torn up and public services brought back entirely under public control immediately. Labour should be demanding the nationalisation of the utilities, banks, and major monopolies, like Carillion and co. These gangsters should not be compensated for holding the public to ransom!