The Carillion corporation put £4.1 million into the new Darent Valley hospital, in Dartford, Kent, under New Labour’s Private Finance Initiative (PFI. Now it has sold its stake, and walks away having quadrupled its £4.1 investment within six years.
The extra millions in the pockets of Carillion's bosses come from the National Health Service, which, like the public-sector bits of all PFIs, now pays a regular fee for the hospital. Carillion’s trick is to cash in its future fee income straight away, by selling its stake at a price.
According to Jeremy Colman of the government’s National Audit Office, gains from PFI have often “greatly exceeeded even the wildest dreams of the private sector”.
About £32 billion of PFI projects, where private companies bid to build and manage public sector contacts and receive a fee in return, are already up and running. The private companies could cash in about £3 billion of that immediately, and the Financial Times (30 November) reckons they would make about 100% profit (another £3 billion).
The government’s case for PFI is that they need to raise funds, and it’s good for the private sector to take on the risks in large construction projects. But the government can raise funds easier than any private company, if it chooses; and, as Colman points out, if an unforeseen disaster hits some big project, the government will still bail it out.
In fact, PFI is a scheme to let private profiteers enrich themselves at public expense. And the pot they enrich themselves from is the one which is supposed to pay for urgently-needed hospitals and schools.
The labour movement should mobilise to stop the PFI rip-off, and demand that the whole process of privatisation of public utilities be stopped and reversed.
By Rhodri Evans