Private Finance Initiative - Treasury Contents

Written evidence submitted by Edward Milner

I am an ordinary member of the general public, a pensioner aged 69, a science graduate previously working as a BBC TV producer and then as an independent TV and video producer. My wife is an experienced Practice Nurse working in the NHS for 40 years.

As a scientist I have always been impressed by the "evidence-based" approach of the NHS towards health policy, and to some extent and in some areas by education policy. However this approach seems to have been completely abandoned when it comes to funding. I have read a good deal about PFI and projects in both health and education fields. It seems that not only is there no positive evidence on which the whole idea of PFI was started (by the Labour Government), but no serious analysis (to inform policy) of the PFI experience up to now. My impression is that if the evidence was used, the entire idea would be abandoned; clearly PFI is a bad deal for the public and a means of benefitting small numbers of influential people either with profits, or in the case of politicians, the opportunity for patronage. The test for politicians at local and Government level would seem to me to be as follows:

Would you countenance a PFI scheme if it was your own money involved?

Two factors seem to me to militate against even the best possible PFI schemes:

1.  Raising loans must be cheaper for Governments than commercial companies; by turning over schemes such as building a new hospital to the private sector inevitably means that the loans involved will be more expensive, and costs of the project much higher; I believe this has already been demonstrated in several scandalous cases.

2.  With shareholders and other private investors involved (and expecting profits), how can such schemes possibly be good value for money? On the other hand, if they are profitable wouldn't such profits be better accruing to the public purse?

April 2011

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Prepared 10 August 2011