Friday, September 13, 2019



Why PPPs are a bad idea

When National was in power, they were very keen on Public-Private Partnerships (PPPs) - basicly, using private companies to finance public infrastructure as a way of hiding debt from the public. They were keen on using them for everything - roads, schools, hospitals. But as the UK shows, that "service" of keeping debt off the government books is very, very expensive:

NHS hospital trusts are being crippled by the private finance initiative and will have to make another £55bn in payments by the time the last contract ends in 2050, a report reveals.

An initial £13bn of private sector-funded investment in new hospitals will end up costing the NHS in England a staggering £80bn by the time all contracts come to an end, the IPPR thinktank has found.

Some trusts are having to spend as much as one-sixth of their entire budget on repaying debts due as a result of the PFI scheme... The findings raised concerns that the diversion of such large sums at a time when many trusts are in the red and coping with the fast-rising demand for care. There are fears it could damage the quality of care and risk patient safety because trusts do not have funds to hire enough staff.


And the reason why is obvious: firstly, it costs the private sector more to borrow than the government (especially at the moment). And second, they're going to want a hefty profit margin. And together, this means that the UK government is ending up paying over six times more for stuff than it needs to, if it had been honest about its spending and debt.

So when Labour talks of being "open for business" for transport PPPs, this is what they're open for: screwing the public with dishonest accounting and massively inflated costs, while big companies laugh all the way to the bank with guaranteed profits. And that is something we should simply reject.