Reported in Private Eye this week that American author John Flynn writes:
"Mussolini resorted to a subterfuge to pay contractors without increasing his budget. He would make a contract with a private firm to build certain roads or buildings. He would pay no money but sign an agreement to pay for the work on a yearly instalment plan. No money was paid out by the government. And hence nothing showed up on the budget.
Actually the government had contracted a debt just as much as if it had issued a bond. But because no money passed, the whole transaction was omitted from the treaury's books. However after making such a contract, each year the government had to find money to pay the yearly instalments which ran from ten to fifty years.
In time, as the number of such contracts increased, the number and amount of the yearly payments grew. By 1932 he had obligated the state for 75 billion lire of such contracts. The yearly payments ran into billions. What he did by this means was to conceal from the people the fact that he was plunging the nation ever deeper into debt."
Of course, it couldn't happen here.
The Private Finance Initiative was begun under the Conservative government of John Major in 1992. It immediately proved controversial, as it was perceived by critics as a back-door form of privatisation. Nonetheless, the Treasury found the scheme advantageous and pushed Labour to adopt it after the 1997 General Election. PFI has continued and, indeed, expanded under Labour. This has been strongly criticised by many trade unions and elements of "Old Labour". The 2002 Labour Party Conference passed a vote against PFI, though this did not change the government's policy (Now there's a surprise - GOS).
there have been a number of high-profile PFI failures
One of the most shocking examples is the Mapeley-STEPS deal. Under this deal the buildings of the Inland Revenue and the contract for their maintenance was given to a company based in a tax-haven. Later that year Mapeley hiked their charges well above the public sector cost due to financial problems in other parts of the company. It transpired that if the Revenue didn't pay the higher costs Mapeley was likely to go bankrupt, in which case the buildings would have reverted to Mapeley's bankers, the Royal Bank of Scotland.
Another example comes from a government report leaked on 17 June 2005. A new privately financed hospital in Leeds had "breached every section of the fire safety code". The Skye Bridge PFI scheme infamously cost the public £93m (and required the closure of the existing ferry to prevent competition), although it should have cost only £15m to build. A recent BBC Radio 4 investigation into PFI noted the case of Balmoral High School in Northern Ireland due to close because of lack of pupils but whose PFI deal is due to run for another 20 years at the cost of millions of pounds to the taxpayer.
Furthermore, the scale of PFI projects in the health & education sectors since 1997 is now having a serious impact on public service budgets. Because the projects are more expensive in the private sector (on average 30% more than if the Government borrowed the money and did the work in the public sector) the payments to the private owners of the PFI schemes are stretching already constricted budgets. Many Health Trusts are in serious difficulty already, and when the level of spending falls in 2007, some may become insolvent.
An article in The Guardian describes "Royal Blackburn Hospital as the best and worst example of saving and wasting public money. It qualifies for the cheapest and most expensive cost for replacing a key - £4.26 to £47.48. It also qualifies for the most expensive bill to fit a data point - £398.30 - and the most expensive lock change - £486.54. The cheapest lock fitting was in Calderdale Royal Hospital in Halifax at £30.81. The cost of supplying and fitting electric sockets varied from £302.30 in schools in the Wirral to £30.81 in schools in Kirklees.
Three projects which have already been heavily criticised by the NAO as bad value for money - the Norfolk and Norwich hospital, which is too small; the Queen Elizabeth Hospital in Woolwich, which had run into financial problems; and Fazakerley prison in Liverpool- come under fire for PFI costs. The government's NHS agenda for change programme, which involved major staff changes, has cost the Woolwich hospital £15m. Fazakerley prison is having to be extended at a cost of £25.3m.
Other programmes under fire include the new Croydon Tramlink in South London. The local authority cannot put new trams on the track or change the timetable without renegotiating another PFI contract. Officials do not know the costs of this yet."
There's another Guardian article here.
Though there does seem to be some similarity between PFI and Il Duce's method of defrauding the public, in every other way the resemblance between inter-war Italy and modern Britain is very slight. Mussolini's state was a fascist dictatorship, and we live in a democracy and, as any fule kno, we enjoy freedoms unknown under a totalitarian regime. For instance
• in a dictatorship you can vote, but your vote doesn't actually make any difference
• in a dictatorship you are spied upon wherever you go, and the authorities keep a dossier of all your activities
• in a dictatorship you can be arrested and punished for saying or even thinking the wrong thing
• in a dictatorship you can be arrested and punished for protesting peacefully ...
• in a dictatorship you are kept compliant by propaganda designed to make you fearful, and encourage you to believe that only by giving up your basic freedoms can you be kept safe
• in a dictatorship you run the risk of becoming embroiled in foreign wars for the most cynical of reasons
• in a dictatorship the police don't primarily exist to protect you from law-breakers, but to ensure that you cannot protect yourself against the law
• in a dictatorship the rιgime interferes at every stage of education to ensure that children, and those who teach them, are obedient servants of the state
• in a dictatorship politicians, industrialists, the rich and the beautiful tend to flourish at the expense of the ordinary citizens
So, let's be thankful we live in a democracy, not a dictatorship.
Whew, what a relief! Mind you, our beloved leader would look rather cute in one of those berets with an eagle on the front ...
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