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PFIs poor value for money

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Registered: 21-03-2011

PFIs poor value for money

It took a Parliamentary Select Committee to realise that Private Finance Initiatives represent poor value for money?  http://www.bbc.co.uk/news/uk-politics-14574059
I'm sorry but it is blindingly obvious that these rip off schemes were purely an accounting method to "hide" expenditure from the Public Borrowing totals. Yet more tax burden on future tax payers. I'm so pleased no PFI schemes were introduced to develop the fibre telecommunication infrastructure in this country. It was bad enough that BT promoted the use of Chinese network equipment over UK based suppliers.
Now Zen, but a +Net residue.
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Community Veteran
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Registered: 12-08-2007

Re: PFIs poor value for money

I have to fully agree with you.  Another one of Clown Brown's slight of hand tricks.  As an example, 106 NHS schemes cost £11bn to complete but the NHS will pay £65bn for them.  Some trusts are currently paying in excess of 10% of their budget in PFI repayments. This is just one example.  It doesn't include other projects such as schools, prisons, libraries etc. Prudence - I think not Angry
Community Veteran
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Re: PFIs poor value for money

Yes, totally agree with what you both have said, PFI was a total con.
It was started by a conservative government but rapidly spread under Labour.
Anyone with an ounce of  common sense could see it was a con, say the cost of one hospital was a hundred million pounds the government agreed with private firms to build 10 new hospitals and then pay the private firm 10 million to use each one per annum so on the NHS books it would look like the government had built 10 new hospitals for one hundred million,  imagine the number of votes in that but as time has gone on the chickens are coming home to roost  as the government is running short of money and cannot continue to pay, contracts will be broken and how much will that cost the taxpayer.
The other scandal is that these hospitals are owned by the private firms and that's why it costs £75 to change a light bulb and the cost of all these repairs are charged to the taxpayer.
This also confirms that any government will do or say anything to get votes irrespective of the consequences to the taxpayer.
Community Veteran
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Re: PFIs poor value for money

Our present government has started to attempt to renegotiate some of these contracts to see if they can get the cost down.  This isn't easy when they are tied into a legally binding agreement. A number of PFI building companies have been told they can expect no more government contracts if agreement can't be reached.  So far only £2bn has been saved.  This is better than nothing but a small drop in the ocean.
Community Veteran
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Re: PFIs poor value for money

I Guess the vast amount of profits that these firms have made will not be there in future contracts so they will weigh up whether or not it's worth agreeing to change a current contract.
I suspect in most cases it won't be.
pierre_pierre
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Registered: 30-07-2007

Re: PFIs poor value for money

my local community hospital was built under a PF! after the finance director of the PCT massaged the sale of the old site for houses and the money could not be found,(he ended up in jail)  The running was also PFI to a Canadian company for an initial 5 years, they were given notice of termination after about 9 months to end at one year, the control passed to Serco about 6 weeks later.
It is a convoluted business to find who does what, and the PR person denies all, but I found the correct story and made here face red
pierre_pierre
Grafter
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Re: PFIs poor value for money

Broomfield Hospital in Chelmsford also suffered from the same Finance director and the New extension was a design and build PFI
dont know what muppit designed it, but when the first Ambulance turned up with a patient, they found you could not get the ambulance bed into the lifts, they had to go up in the old hospital and be pushed along the corridors to the new part
Muppet two, the Helicopters landing pad is on the roof of the A&E dept, a good idea, but it is served by the Wattisham air sea rescue and the pad wont take their weight
pierre_pierre
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Re: PFIs poor value for money

who stareted PFI?
Quote
How did PFI start? And why did the Labour Government promote it? 

The idea of PFI in the health sector was started in 1992 under the Conservative government but opposed vigorously by the Labour Party. However, following the election of a Labour government in 1997, PFI projects have been promoted vigorously and have expanded enormously – in health as in other sectors. Whereas in 1997, investment in the NHS under the PFI was non-existent, since 1998/99, it has accounted for just under 30% of capital spending in the NHS.
Why did the Labour Government promote PFI? The Labour Party came to power in a situation in which an administrative fragmentation within government coincided with a political context in which the public were perceived as demanding improved public services while being reluctant to pay increased taxes.  It was in this context that New Labour came into power with a ‘pragmatic Third Way’ approach, an approach presented as between the dogma of the Right and the dogma of the Left.
PFI was attractive to the new Labour Government Party because it offered    the capacity to fund public sector investment without raising (at least over the life of one or two parliaments) income tax or public sector borrowing while also promoting the private sector which many in New Labour genuinely believed (and doubtless still believe) to be more efficient than the public sector.
Gordon Brown, the incoming Chancellor of the Exchequer, adopted two fiscal rules. One is the so-called golden rule of matching current government revenue with current expenditure over the economic cycle; the second was to keep the public debt-to-GNP ratio down. Investment under the PFI was useful to the second rule but over the long-term is likely to threaten the first. However Governments are not elected for the long-term.
Alongside this macro-economic usefulness of PFI, there has been at least a rhetorical emphasis on the micro-economic objective of providing value for money (VFM). The emphasis on VFM has accompanied a gradual Treasury-led standardisation of the procedure for approving PFI contracts. 
pierre_pierre
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Re: PFIs poor value for money

the Broomfield story http://www.pfiproject.co.uk/index.php?p=What%20is%20the%20Project?
Quote
Mid Essex Hospital Services NHS Trust was established in November 1991, but plans to centralise acute services in Chelmsford stretch back to the 1970’s. These plans are now becoming a reality via a major £180 million project, which, along with associated modernisation of the way we provide services, will improve quality and efficiency and ensure the aims and targets of the NHS Improvement Plan are met.
Community Veteran
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Registered: 12-08-2007

Re: PFIs poor value for money

Another report this weekend criticising the poor value of PFIs.
PFI
pierre_pierre
Grafter
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Re: PFIs poor value for money

I see it blames John Major for this nonsense  Crazy
Community Veteran
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Re: PFIs poor value for money

John Major's Conservative government introduced PFI, as stated by Gleneagles, but in a very controlled way.  There is no criticism of Major in the report  as I read it.  The problem was the total abuse of PFI by Clown Brown.  He used PFI to keep most major capital expenditure of the government balance sheet.  Prudence in handling our economy Undecided Undecided  I don't think so Sad Sad   
Community Veteran
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Re: PFIs poor value for money

John Major's Government may have created PFIs, but even in those early days it was obvious to me they were poor value for money, just an attempt to hide spending from the public spending figures. If it was the case that a simpleton like me untrained in economics could spot the flaw, how come the Labour Government embraced them so wholeheartedly?  A case in point the Metronet PFI maintenance forced on London Underground by Gordon Brown even when Red Ken was against it. A colossal waste of money and poor results.  Nope, the Labour Government actively perpetuated the lie that PFI were good value for money. It enabled them to boast that they were making exceptional progress when all they were doing was loading expensive debt on the future taxpayers of the UK.
I'm personally very grateful to Gordon Brown; I've made some very good investments by choosing to go the exact opposite to what he claimed to be a good idea. History will record the last labour government as a being major disaster to the UK which is sad because there were some very good Labour MPs who were sidetracked by their dismal leaders.
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Community Veteran
Posts: 18,545
Thanks: 191
Registered: 12-08-2007

Re: PFIs poor value for money

I know Major's government created PFIs but can't recall him ever using them. They were totally embraced by Bliar and Clown Brown as a way of hiding the true cost of their plans.  As stated by AlaricAdair this has created a massive debt that future generations will have to pay off.  When they were proposed in the first place they were strenuously denounced by a number of opposition MPs including Alister Darling and Patricia Hewitt, future health minister.
By October 2007 the total capital value of PFI contracts signed throughout the UK was £68bn, committing the British taxpayer to future spending of £215bn over the life of the contracts. There were a further 3 years in which the Labour government spent through PFI including some sweetners to Labour areas in the country to try to keep them on side for the General Election.
pierre_pierre
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Re: PFIs poor value for money

Quote
The controversial Private Finance Initiative was first introduced to the public sector under the Conservative government of John Major and the contract for NNUH, one of the first PFI hospitals, was signed in 1996. T

thought this was before Labourwon the general election
Quote
On January 11, 1998, Prime Minister Tony Blair announced the go-ahead for the construction of a £214 million, 809 bed, new hospital in a broadcast from Tokyo on the BBC's Breakfast with Frost show. [2] Site work started the following day (January 12, 199Cool.