Britain Can't Afford Any More PFIs

Britain can't afford any more debt

Writing in an op/ed in The Guardian, Colin Cram demonstrates a very real gift for missing the point.

Writing on the topic of Private Finance Initiatives, Cram questions the critical attitude of the current Conservative Party government toward PFIs.

For the uninitiated, Private Finance Initiatives were largely used by Labour Party governments to hide billions of pounds in public spending effectively off the national books.

Cram writes:

"The criticism of the Private Finance Initiative (PFI) being levelled by some government ministers is ironic in that it was introduced by the previous Conservative government.

Norman Lamont was chancellor of the exchequer at the time, closely followed by Ken Clarke, under whom the initiative prospered. As Professor Colin Talbot points out, PFIs were created to address a very big and real problem.

When in opposition in the 1990s, the Labour party was critical of the initiative, expressing some similar concerns to those of some of today's government ministers. However, when Labour came to power, it realised that if it wished for infrastructure improvements to schools, roads, prisons and hospitals, for example, it had little option but to adopt it. It therefore re-badged the scheme the Private Public Parternship (PPP) and accelerated its use."

Apparently Cram has failed to discern even the most basic distinction: the Labour Party opposed the use of PFIs while they were in opposition, then promptly set to using them while in government. The Tories opposed PFIs while in opposition, and maintained that opposition while in government.

And there's a very good reason for them to reject PFIs:

Britain simply can't afford any more debt. As of July 2011 the UK's public debt was 61.4% of its GDP. If the government were to expropriate everything produced on the Isles this year to pay down the public debt Britain would not be able to feed its population.

Cram goes on to suggest that PFIs had given Britain more up-to-date hospitals, schools, and other public assets than otherwise would have been possible. But this is actually flagrantly untrue. If anything, PFIs simply gave the British government a means to escape accountability for running up the public debt.

Any of the goals accomplished by PFIs -- such as attracting private investment in public assets -- can be done better under a system that doesn't serve to evade public accountability.

Colin Cram shouldn't be criticizing the David Cameron government for discarding PFIs as a means of funding public projects. They should be commended for it, and any philosophical contradictions are purely of Cram's own imagination.