Companies that benefit from Government contracts worth hundreds of billions of pounds under the private finance initiative (PFI) were urged today to pay some of it back to help protect public services.A national PFI Rebate Campaign was launched at the House of Commons with the backing of more than 50 MPs, calling for companies to accept a mere 0.05% reduction in payments.
Despite the tiny size of the proposed rebate, campaigners say the rebate would still raise £500 million in savings for schools, hospitals and other PFI projects.
We say the rebate should be more like 0.5% at least to recover £5 billion.
The previous Labour and tory administrations relied heavily on PFI for the construction and maintenance of public sector buildings and the long-term provision of services.
The initiative was designed to speed up the renewal of public service infrastructure, but left councils and health authorities with massive bills to private companies to be repaid over many years, often leaving debts to be paid long after the useful life of the project.
A total of around 800 PFI contracts are in operation with a capital value of around £64 billion, according to a House of Lords report earlier this year. Some £267 billion in repayments are due to be made to private companies over the coming 50 years with some cantracts expiring 20 to 30 years after the useful life of the contract has expired. Meaning infrastructure will have to be renewed whilst maintaining ongoing debt for a generation after.
Conservative MP Jesse Norman (Hereford and South Herefordshire) said: "Under Gordon Brown, the decision was made to push PFIs wherever possible, putting huge pressure on schools and hospitals to contract out not just on the construction process but also on long-term provision of services.
"The PFI obligations taken out on Mr Brown's watch now total over £200 billion, and will cost this country for decades. We are seeking a very modest saving of 0.05% on the payments under PFI. The major PFI companies include Innisfree, Semperian, Serco, Balfour Beatty, HSBC, Lloyds and RBS. These firms have done extremely well out of PFI over the past decade, and it is right that they should contribute now to our national economic recovery. In these difficult economic times, no one should be exempt."
Not only have these firms benefitted from PFIs, they have also been subsidised by our underwriting of the banking system and the rescue of Lloyds and RBS.
When will we all be in this together, we ask?
