All PFI Contracts Should Be Cancelled and the Assets Nationalised 192

The closure of 19 schools in Edinburgh because of jerry-building under the Blue and Red Tories’ Private Finance Initiative, throws a stark light on the impact of the neo-con age on ordinary people.

The Private Finance Initiative was always a scam. It was yet another way to divert money from ordinary tax-payers to the super rich. Instead of schools and hospitals being built and paid for by the taxpayer, they were built and paid for by the bankers, hedge fund managers and other “financial services” sharks, giving state guaranteed returns averaging 7% from the taxpayer, when we now have negative interest rates. It is such a massive scam that every man, woman and child in the UK owes £3,000 to PFI financiers. Like so many far right Tory ideas, its most fervent practitioners were Gordon Brown and Tony Blair.

The “advantage” to government was the accounting trick of a reduction in state capital spending. The other “advantage” was that the private sector was supposed to have more “efficient” methods, due to the profit motive. So somebody in a local authority organising the building of a school from the desire to do the best for the children of their community, was less “efficient” than a hedge fund manager doing it to make the maximum cash. The result? Jerry-building.

I do not want to spend the rest of my life paying capitalist bloodsuckers through my savings. All PFI built infrastructure should be nationalised – without compensation. In doing so the taxpayer will be reclaiming assets to the value of only 10% of the money given to UK bankers in bailouts. Clawing back 10% of the cash we gave the bankers would be a damn good thing. If it caused the odd bank to crash, that is long overdue. Ordinary people’s deposits up to £75,000 are protected anyway. Those with more have it in Panama, the Caymans or the BVI, apparently.

192 thoughts on “All PFI Contracts Should Be Cancelled and the Assets Nationalised

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    • Republicofscotland

      Thank you for that link, very interesting indeed.

      According to Mr Monbiot, we could cancel those PFI contracts (a long shot) using the term of “odious debt” lets hope so.

      Even more interesting from your link, is that, no one not even politicians are allowed to see the details of the PFI contracts.

      I find that utterly astonishing, and I thought TTIP was a cabalist rich mans scheme, it has nothing on PFI.

  • Republicofscotland

    Well said Craig, Blair and Brown have left our children and their children in debt to the private sector. I’m pretty sure that there’s no legal way out of these hideous and bloated contracts laid down by the incompetent and scheming Red Tories, previously known as Labour.

    Now we find that not only were the PFI deals a financial danger to the tax payers health, but the buildings, as well, are unfit for purpose. If I recall a young girl was killed when a gym wall fell on her a couple of years ago, I’m unsure though if that was a PFI or more fitting as you suggest, jerry-built building.

    The Scottish government has called upon all PFI constructions in Scotland to be checked out. However the closure of 17 schools in Edinburgh, will affect, pupils, and especially those taking their exams in the near future.

    Although the Labour party in Scotland, are now no more than a botched up side show, to be mocked and derided, and in the near future even pitied.The painful and expensive legacy, that they’ve left in Scotland (PFI) will cost future generations dearly.

    • Kempe

      ” If I recall a young girl was killed when a gym wall fell on her a couple of years ago, I’m unsure though if that was a PFI or more fitting as you suggest, jerry-built building. ”

      The school in that incident was built in the 1950’s so unlikely to have been either. Probably a lack of maintenance.

      So it seems one company has possibly cut corners on various building projects around Scotland and PFI is to blame? Would they really have done a better job had they been paid by any other method? Of course “only” PFI built schools are affected because all new schools are built under PPP/PFI rules. Yes PFI is a scam to get debt of the balance sheet but to politicise what is a technical construction issue looks like desperation and panic on the part of the SNP.

      • Republicofscotland


        Thank you for info on Liberton high school, I should’ve checked myself, 1959 to be precise, though there has been a school on that site since the mid-17th century. However the gym (PE) area, saw an upgrading in 1986, according to the schools website.

        As for your second point Kempe, in my opinion, it’s the outright racketeering, if you will, the nature of the PFI contracts agreed under Labour. They’re draining vital monies from the NHS. As for the point you make “a technical construction issue” it only highlights a already shoddy set of dealings.

        All PFI contracts will continue to come under the spotlight due to the nature of their existence and the terrible cost to the tax payer.

        I strongly advise you to read Vronskys link.

  • Celia Fitzgerald

    Absolutely the right thing to do but there’s not a hope in hell of our right wing neoliberal SNP government doing anything like that for fear of alienating their capitalist cronies. They will bleat, (no, bark and snarl) that their hands are tied since they’ll be sued and that in any case it’s not their problem because it was brought in by the Tories & the Blairites. What is the point of our government? Either they just cannot go against their core Tartan Tory nature or they cannot go against their Tory masters for fear of them clawing back the miserable inadequate & ephemeral “powers” devolved to them.
    All this triumphalism and arrogance and empty posturing and rhetoric reminds me of when Israel withdrew the occupying Jews from Gaza and the Palastinians Celebrated in triumph with much fist stabbing and cheering. Even I could see what was coming. Shortly afterwards Israel started bombing the hell out of Gaza.

  • Astragael

    Agree wholeheartedly with Mr Murray’s sentiments – while wondering, quite apart from the method of finance and its implications, how this could have happened. The codified Scottish Building Standards are extremely onerous. Buildings must be designed to comply and council officials are employed to ensure that compliance in all cases: so what was Building Control doing and where was the Master of Works (whose rôle is ensure that the client gets what he is paying for) in all of this?

    • Paul Barbara

      But not onerous enough to stop the Scottish Fire Service from disciplining a Scottish Fireman, causing him to leave the service, over his appearance in a video seeking to get a proper investigation into building collapses in America, which if the US interpretation was correct, would require massive restructuring of building design, and the demolition of many high-rise buildings around the world.
      Also, Scottish Police were so worried that their officers could not handle the video, they ordered all copies given to police stations by the fireman should be sent to HQ: ‘Brian Maxwell resigns from Fire Service after appearing in INCONTROVERTIBLE
      After appearing in the film Scottish Firefighter Brian Maxwell faced disciplinary action from the Scottish Fire Service. It seems his employer did not like him raising concerns for the safety of his colleagues following the first and only collapse in history of a steel framed high rise building from fire alone.

      • Astragael

        A red herring if ever I saw one! Why should the regulations, about the construction of buildings in Scotland, and their implementation (or otherwise) have any bearing on fire service employment practice?

  • Paula Varley

    Causing banks to crash is not a sensible idea. It could wipe out retirees’ pensions for one thing. But I agree with the general point about PFI. We should certainly not continue to meet the terms of PFI contracts. They are a drain on the public sector – especially hospitals.

    • Loony

      You are correct – causing banks to crash is not a sensible idea, and the damage caused by a crash will not be limited to the retired and their pensions. Unfortunately there is a slight problem – the banks are systemically insolvent. Therefore the crash that you fear is already baked into the cake.

    • fedup

      Craig the blood sucking bastards are trading the PFI on an 18 percent yield it is a pernicious little trick of the deregulated city that built an already obsolete building that would need rework at phenomenal additional costs! The whole PFI scam worked as the photocopier leases of the 1970s 1980s and were a construct for ripping off the users.

      The whole Ponzi scheme stinks and as ever the bloody pensions are pulled out, fact that pensions area separate entity somehow makes not a difference to the poxy narrative.

      Good on you for writing on this subject.

      As the fat cat tax evasion/avoidance is making the headlines with the usual bum’s rush to cover it up and get back to business as usual.

  • Resident Dissident

    Just a guess but I suspect most of the PFI assets are no longer on bank balance sheets but were sold off a long time ago (for handsome profits) to various pension funds and savings vehicles and perhaps the odd offshore trust or investment company so those who would suffer as a result of nationalisation without compensation (aka theft) would be pensioners and other savers. A far fairer and less disruptive treatment would be just to reduce the return paid on PFI assets prospectively to the market rate for assets with government risk.

      • Resident Dissident

        Idiot – the property is held by the state – money was provided by the finance company in order to fund its purchase/development – not paying anything back would be theft.

        • Canexpat

          Perhaps the offence falls under the 1968 Theft Act as ‘Obtaining a Pecuniary Advantage by Deception’. If not, I’m sure a conspiracy to defraud would cover it.

  • Resident Dissident

    Here’s a nice offshore company listed on the UK Stock Exchange that holds quite a lot of PFI assets (£1.7bn) – note the 60% increase in the share price since 2010 and 7% dividends all for holding assets with government credit risk. If you want to see where the PFI value has gone – then I suggest Craig looks at companies like HICL and its shareholders.

    • craig Post author

      Thanks that’s a very interesting link. But reinforces my opinion the assets should be nationalised.

      I would say that I am particularly unimpressed by arguments about people’s pensions. The Ponzi schemes have to collapse anyway eventually.

      • Resident Dissident

        So speaks someone with a defined benefit public sector pension – little danger of a collapse in value there. Those of us in defined contribution schemes (i.e. most of us) probably see the world a little differently.

        • John Goss

          I don’t doubt Craig has a government pension, and is probably more entitled through his integrity than most government servants, but I should be very interested to know how you can be so sure, unless he has mentioned it. I could have missed this.

          • Resident Dissident

            It’s on his file here in Cheltenham! I think if the Government had taken away his pension entitlement it might just have been mentioned in his book.

  • Ben Monad

    Has Capitalism had enough room to prove it’s promises? Trickle-down, supply-side or whatever moniker you wish to apply; time to try something else.

  • John Spencer-Davis

    What is to prevent a future government repudiating this debt by Act of Parliament?

    • bevin

      Nothing. Except, perhaps, EU ‘law’ and the provisions of “free trade” treaties.

      This is an old argument, made, notably, in England by Cobbett who called for an ‘equitable adjustment’ of the debt. The truth is that, brazen though the scam of PFI is, it differs only in detail from the National Debt (Disraeli’s ‘Dutch Finance’) system.

      One interesting aspect of the current situation is that the effect that LIBOR had in setting interest rates has massive public finance implications. We know that LIBOR was fixed by the banks: what will be done about that?

      • Resident Dissident

        The problem with PFI is not that the repayments were linked to LIBOR (current 12m LIBOR is c1%) but that they were linked to all sorts of things other than LIBOR and those rates were well in excess that which would normally be paid for taking on government credit risk. Basically politicians were so keen to undertake the projects concerned and get the short term kudos they could be taken for an expensive ride by those providing and arranging the finance. This is what happens when the pursuit of what is politically expedient takes priority over basic economics – comments by many at the blog make it crystal clear that is not a phenomenon that is unique to establishment politicians.

      • Why be ordinary?

        At the moment the UK is living beyond its means, carrying massive trade deficits which are only sustained by foreigners lending us money eg buying government debt or investing in infrastructure including PFI. If the UK repudiates its debts they will either stop investing or start charging much higher risk premia (as they are already starting to do in fear of Brexit)

    • Why be ordinary?

      Actually it’s the European Convention on Human Rights which prohibits nationalization without compensation.

  • Paul Barbara

    Here’s George Galloway on the NHS/PFI, and also on Brexit.
    For all his faults (including a personal ill-judged email to me when he was my MP) he has some very good points (support for Palestine, NHS and Jeremy Corbyn -as wall as Brexit and anti-PFI):

    Britain’s National Health Service{ e/

    George Galloway evokes Tony Benn as he pleads with the Left to vote to leave EU ‘rich man’s club’:

    • Resident Dissident

      “George Galloway evokes Tony Benn as he pleads with the Left to vote to leave EU ‘rich man’s club’”

      Presumably he prefers to be a member of an English Nationalist’s rich mans club with the likes of Boris Johnson and Nigel Farage to the fore. There is a reason why the TUC and most sensible trade unionists are opposed to Brexit.

  • RobG

    The ‘Blue and Red Tories’ are stealing everything that’s not nailed down, but how do we stop this? How do we get some measure of morality back into public life?

    A few days ago I had a conversation with my mother about all this (mama is now in her mid 70s). Principally we were talking about what’s going on in France at the moment, which is 1789 and all that, but we also touched upon corruption in the UK, and the endless wars, etc. My mother has reached the conclusion that most people are in total denial of it all, because it’s too awful to contemplate, it’s too difficult to deal with.

    • Paul Barbara

      ‘My mother has reached the conclusion that most people are in total denial of it all, because it’s too awful to contemplate, it’s too difficult to deal with.’
      But also, of course, there is wall-to-wall ‘entertainment’, and the total MSM propaganda stream which lambasts and vilifies the truth-tellers, whilst not engaging them in debate.
      I’m in the same generation as your mother, and I have the benefit of being involved in Human Rights campaigns since the early 1970’s, so I am hard-wired with the knowledge of our ‘governments’, militaries and ‘Security Services’ venality and downright evilness.

  • bevin

    Both this post and the ones preceding it are reminders that, historically, a primary purpose of the British State, and one that has ensured it the loyalty of the wealthy, is to redistribute tax money from the poor to the rich.

    There have been, in times of national emergency, exceptions to this rule-notably during and after the last World War- when the effects of robbing the poor to pay the rich had so weakened the nation that the state itself was in danger.

    But the general trend, since 1688, has been to expropriate, by law, public wealth and the wealth of the public to direct it into the pockets of the rich. State contracts have been one means; Public office was a favourite, particularly in the C!8th and in the Empire (‘a system of out relief for the aristocracy’); but the ‘funds’ the public debt has been the main transmission belt for lifting the widows mite into the rich man’s pocket.

    As we see from the Cameron case, the rich don’t even think about the ethical implications of the legislation that they make in their own interests.
    It genuinely doesn’t occur to most of them that their laws are confiscatory, so far as the poor are concerned, and designed to pass enormous benefits up to the wealthy. It is the legislation of the political caste, rather than their sordid abuse of expense and salary rules, that is the real scandal.
    They rely on the Academy and the media to rehearse the nonsense of capitalist ideology, whereby Cameron’s tax relieved capital is held to be a source of investments for the public good, and better left in his hands (ir those of his trustees) than in those of the feckless agents of the state.

  • Ba'al Zevul

    The PFI scam was a very clever idea. Instead of borrowing money to fund social necessities, and then having to pay it back, you have to pay it back without borrowing it in the first place. Then, when the schemes go tits-up, who’s still left carrying the can? Check the mirror.

    O/T, and wholly predictable, aside:

    Delaying it didn’t make the interest recede enough, evidently. What I don’t get is that the terms and conditions attached to secret evidence supplied to Chilcot were agreed, and compliance could have been easily verified, at the time. Why does it have to go through a further, superfluous stage of vetting?

  • derek hannon

    75000 not protected read new rules if bank collapses it has to pay its own way out first including what is known as shaving savers money before goverment steps in

    • Resident Dissident

      No they don’t – banks have to have plans/living wills as to what they will do in the event of a collapse – but if they cannot pay out depositors then the first 75000 is covered.

  • glenn_uk

    Couldn’t agree more. It’s astonishing that buying now, and expecting the future generation to pay (at an enormous rate of interest) later, was ever considered in the least bit acceptable. It is such an incredible scam, I’m surprised it is considered legal. Private Eye has been banging on about this for well over a decade, there is no real defence for the practice, yet it continued unabated. It’s throughout the system, trains are leased at a rate (for decades) that would actually pay for the rolling stock many, many times over – within just a few years very often.

    This is just another mechanism to transfer taxpayer money to private interests. The system is riddled with such scams. A less passive, disinterested or distracted population would have these miserable conmen in fear for their lives. Instead, they grow rich, fat and old at our great expense, lauded as if they were heroes and visionaries.

  • Willie

    Labour implemented PFI with a vengeance. Off balance sheet borrowing to minimise the PSBR was one thing, but the expensive mezzanine finance and self verification of building standards was quite another thing. Fill your boots was Labour’s message. And fill their boots they did building tommorow’s slums today. Well I’d hammer the PFI concessionaires each and every time they failed. Make em perform, make em earn their money, get stuck in.

  • Brian

    “Like so many far right Tory ideas, its most fervent practitioners were Gordon Brown and Tony Blair.”

    Both true Scotsman through and through! Bet neither of them ever stood a round down the pub either.

      • Republicofscotland

        Thank you Jeezer for that link.

        But you have to be alert when reading such articles the Express is a fervent anti-SNP rag.

        If you read the article again you’ll see it’s all in the wording, Alex Salmond doesn’t actually offer Edindurgh airport in the sales pitch he offers investment in the green and renewable sector, whilst mentioning that the airport was up for sale as well. Stephen Wilkie the author of the article does a cackhanded job of portraying it as something else to the uninitiated.

  • RobG

    To put in a hoary old quote, “In a time of universal deceit – telling the truth is a revolutionary act.” (Orwell)

    This has never been truer than today, in our age.

  • CanSpeccy

    Jeeze, I knew it was windy in Scotland, but I didn’t know it was windy enough to blow down a school, even a jerry-built school funded by bloodsuckers.

    The idea that anyone with more than seventy-five thousand quid in the bank deserves to lose it, sounds pretty looney to me. What if you just sold yer house, Craig, the money’s in the bank pending purchase of another house, but the bank folds. You think you’d be a deserving loser? Or are you saying you’d have stashed anything in excess of 75K in Panama or someplace?

    No, the government is responsible for providing a sound form of money. If it insists that we use nothing but worthless paper and digits then it had better be damn sure that we don’t get ripped off by the banksters, even if we are contemptible people with more than the price of a London broom closet in our savings account.

    The folks who should suffer if a bank fails are (a) the shareholders, who should never be bailed out by taxpayers, and (b) the officers of the bank whose conduct should be subject to close police scrutiny.

  • fedup

    The sell;
    fixed costs, and not a lot of outlay, only needs budgeting for the outgoing on the payments.

    The trick;
    Keeps the government expenditure to a minimum and makes the balance sheets look great.

    The con;
    Government can print it’s own money and does not need to be reliant on “private financiers” to print our money and then lend it to us! But as the fractional reserve banking con of the house of Rothschild is the de facto system that has been promoted as the “free market” people don’t know any better. Hence the con to strip them off their earnings by charging them 78 pence in every pound as interest repayment. Then taxing them another 18 pence going in taxes leaving the average Joe with four pence in every pound to spend as his/her disposable income. Just dounchyou love the smell of freedom?

  • CanSpeccy

    As for punishing the jerry builders, yes, the government should come back on them for full compensation for loss of use of schools and for full and complete repair of defective buildings. And if the contracts somehow exclude such liability, then there should be a full police inquiry into how the contracts were arrived at, who received kickbacks, after office payoffs, etc.

    • defo

      How about adding the child care costs of 9000 Edinburgh school kids not returning from holiday tomorrow to the cost ?
      Alternative (where?) accommodation costs for their schooling ?

        • defo

          Thanks JSD.
          From your first link..
          “The Edinburgh Schools Partnership consortium (Amey, Miller Construction & Bank of Scotland) who are responsible for this fiasco released a public statement that made it sound like they were doing the public a favour by investing why the schools they built are so structurally unsound that they have a tendency to collapse! They shouldn’t just be accepting “full financial responsibility for investigating and resolving these issues”, they should be accepting full financial responsibility for the alternative childcare arrangements made by the parents of the 9,000 kids who can’t go to school because the profiteers who built and operate their school buildings have no idea if they’re going to fall down or not.”

          It’s so easy to forget the actual human costs of such daylight robbery.

          As to the NHS, we (even the dissenters and devils advocates resident here) all know why it’s being saddled with unsustainable debt.

  • Dave

    In 1997 New Labour was elected on a promise to improve public services and join the Euro-currency. This created a dilemma, because to improve public services you needed to increase public spending, but to join the Euro-currency you needed to restrict public spending to keep within the ‘convergence and sustainability’ rules. I.e. Countries needed to converge their spending so that the Euro would be sustainable once launched!

    To resolve this dilemma New Labour privatised the funding of public services through PFI. This made the delivery of public services far more expensive but it allowed the Chancellor to make the vital but fraudulent claim it was ‘private rather than public’ spending. It isn’t because PFI is underwritten by the taxpayer, but the fiction was part of the ‘mickey-mouse’ accounting needed to meet Euro-currency membership rules. Similar practices were taking place throughout the EU and explains how Greece qualified!

    The fact it’s still going on is evidence the ‘establishment’ still want to join the Euro-currency when it becomes politically possible to do so and my fear is a Remain vote in the EU referendum will be used to nullify the earlier promise of a Euro referendum, because ‘being in means joining the Euro-currency’.

    I know Gordon Brown is often credited with stopping our membership of the Euro, but it was Sir James Goldsmith’s Referendum Party that secured a promise from Labour and Conservative to hold a Euro-currency referendum before joining that (that couldn’t be won) that is the real reason we never joined.

    This is the blind spot of the pro-EU, anti-Austerity advocates, because Austerity is an EU policy to promote/sustain the Euro-currency.

  • lysias

    My recollection is that there’s a lot of discussion of the PFI scam in Owen Jones’s The Establishment.

  • defo

    Indeed Craig. But who would do such a thing ?
    And now? We press on with the obscene, massive rip off that is Hinckley point C.

    • fedup

      Hence the shut down of the thermal plants to create the shortage that will then be solved by the Chinese and their very expensive* electricity!

      * Guaranteed price per KW by our dear leaders!

      • defo

        The rip off might be big, but it’s not even clever.
        Shafted, for all to see.
        Can we have your revolution now please RobG, this is getting silly.

        • fedup

          Just goes to show they don’t give a flying fuck to the extent that they don’t even try and hide it any more. There again even some of the commenters on this board have not connected the dots! proves how effective has been the department of misedauction!

  • C15 fwl

    If as the article says there are 19 schools closed because they are unsafe and they were all built then I can’t see the pfi contract staying confidential for long, or the other contracts.

    A real positive of the Panama papers is that they remind everyone that you should never rely on assumed confidentiality or privilege and never assume that only your sleeping conscious may know the truth. The truth comes out. In parts anyway.


    Why nationalise if you can rescind. Its kinda same thing. Hedgies loosing a few billion is a regular occurrence. Other Hedgies will smell blood and make something out it anyway.

    • defo

      That’s some list ba’al, a nice wee magic roundabout. Make/influence law relating to NHS, join the board in good time, and then contribute company funds to Tory party/pals.
      Plenty PFI gravy there too.

      A choice cut
      “Lord Coe: Conservative – In February 2011 became Director of AMT-Sybex Group, IT supplier to the NHS. Same company that paid for a trip of former MP Robert Keys. William Hague is listed as a director in 2008, and former Tory Mayoral candidate for London Steve Norris is listed as their chairman.”
      Handy for early morning/late night ‘judo’ sessions though. Yeugh. Whatever your gender/inclination, imaging wee Willie Hague…

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