Private Finance Initiatives involve private companies providing services for government departments for a profit. They were first introduced by John Major, expanded massively under New Labour and they remain popular with the current government.
The theory behind PFIs is that it should enable the government to provide services for less money – the theory is that private companies will try to undercut eachother in competitive bidding for government contracts and then attempt to deliver services efficiently in order to maximise their profits – public service delivery should be cheaper than the government employing workers directly.
Private Finance Initiatives do not, however, always work in the public’s interest – there are many many examples of Private Companies providing a poor level of public services to the public while raking in huge profits for themselves. PFIs end up benefitting the (often very large) Corporations that run them, while the general public loses out.
This telegraph article tells of how a PFI contract that the Treasury signed with a company to decorate its offices forbade them to treasury to purchase a cheap Christmas Tree – the treasury had to go through the company – which provided one for 875 pounds.
PFIs are becoming increasingly common – many schools and hospitals are tied into 20 year contracts with firms to provide the upkeep and maintainence of buildings and will be paying over 200 billion pounds for just 60 billion worth of services over the next two decades. This basically means that the tax payer is paying out hundreds of billions to line the pockets of the bosses who run these health care companies.
To give a specific example (from the article)
Jesse Norman, the Tory MP for Hereford, recently told how his local hospital was charged £963 to install a TV aerial. Other public bodies have been billed hundreds of pounds simply to change light bulbs. Since they don’t own the buildings, they are over a barrel. Maintenance charges can be colossal, and simple improvements, such as putting up a shelf, can lead to a bureaucratic rigmarole requiring weeks of consultations and “risk assessment”.
