Rachel Reeves and the Treasury were just exposed for scamming the public

Parliament’s spending watchdog, the Public Accounts Committee (PAC), has exposed the Treasury for planning to con the public with more private finance initiative (PFI) scams.

Eye-watering from the Treasury

PFI is where the government uses private financing to fund public infrastructure. Previous PFI saw the public purse charged over £300bn for infrastructure with a value of £54.7bn. It means around £245bn was lifted from the people and handed to the transnational capitalist class.

In a new report, PAC notes that the Treasury is not currently considering public borrowing as an alternative to PFI, even though selling government bonds is a lot cheaper.

So PAC recommends that:

To maximise the chances of delivering value for money, the Treasury should evaluate the costs and benefits of alternate financing models, including the different costs of borrowing in the public and private sectors, to identify a preferred model for different types of infrastructure.

The watchdog points out that previously:

the Treasury did not consider the cost of government borrowing to be relevant when making financing decisions on PFI deals, and that the value for money assessment favoured off-balance sheet solutions, which gave the illusion of lower public borrowing.

As PAC states, it’s a complete “illusion” that PFI is cheaper, it is just an accounting trick to keep the initial agreement off the government’s balance sheet.

NHS PFI

On BBC Radio 4 in February, health secretary Wes Streeting said he’s “very sympathetic to the argument that we should try and leverage in private finance” in the NHS. Although, he did admit that PFI shouldered “the NHS with an enormous cost that it continues to bear…. I think there is a role for private investment, but the terms of those arrangements, that’s where you’ve got to tread really carefully”.

Then, the HSJ reported in June that:

NHS England has confirmed plans to introduce a mechanism to allow private finance investment into health service infrastructure within months.

This is a shocking development. Even the Conservative government announced “goodbye to PFI” because of parliamentary reports that it’s terrible value for money (a blatant scam).

Risk still falls on the public – not the Treasury

In its report, PAC identified a further problem. The fact that critical infrastructure has to be built so if the private sector fails that risk can still be transferred to the public sector. It says:

The Treasury says that the benefit of private finance includes the incentive for more risk management within the private sector. However, we heard that sometimes there is a misplaced belief that risk transfer to the private sector equates to risk management by the private sector, and therefore there is a false assurance that the problem lies elsewhere.

This is not always the case, as ultimately the government may need to step in if a major supplier of critical infrastructure were to fail, as was the case for Carillion.

The scam of PFI has long damaged the public sector in the UK. A Labour Party-led Treasury should not even be contemplating more of it. But this is not a Labour government as we know it – and the PAC is right to call this mess out.

Featured image via the Canary