Bit political this, but PFI was in fact a Tory invention, used by them in a limited way but then used much more by Labour. Problem being that whatever party is in power, they have the same issue or needing to borrow money because we arent paying our way. And since as Truss showed our credit rating is poor and lenders dont want to know us, imaginative ways have to be used. As with borrowing shed loads from the Bank of England and pretending that it isnt simply printing money like Weimar.
Of course we pay a higher interest rate than Germany. We are far less credit worthy.
We are heading for another IMF bail out but when?
Howard you are quite correct it was a Tory invention, but exploited by Labour. I don't have a problem with debt in itself, but what it is being used to finance.......if its infrastructure projects then fine as there should be improved productivity or greater economic output as a result.
However, Labour used PFI's to outsource eg in house IT development and computer estates and supporting civil servants which dramatically increased the cost of IT services and supporting the computer estate and software, at the same time removing the assets and IT software developed from public ownership. We are renting the software that pays out all the benefits systems. eg pensions. the Inland Revenue Tax and VAT systems, the DVLA and also Home Office and passports I believe to name a few.. In effect, the Government threw away £billions of ICL software developed and ICL computer estate to transfer to IBM, without really working with Fujitsu to encourage them to continue to support ICL infrastructure.
So in order to maintain critical online public services we are at the mercy of commercial organisations at each contract renewal. As Horizon has shown with regard to Post masters, commercial organisation do not always have the public interest and a higher standard of operation/compliance one would expect in services critical to delivery of public services. Within the contracts it allowed for a (from memory) an extra 13% contract loading for risk transfer, however the reality the risk never moved to the commercial entity as they could just wind themselves up and move on and secondly people looked to the Government to deliver their eg benefit payments into their bank accounts. One factor always on the risk register was likelihood of widespread rioting should the benefits payment system fail.
Why is the UK less credit worthy than Germany? Currently, we have economic growth rather than the recession cycle Germany is facing being overly dependent upon its manufacturing base, It will be interesting to see what happens to its current 64% debt to GDP ration going forward, but unfortunately its also constrained by EU monetary and fiscal policy.
