PFI on the balance sheet
A welcome announcement from the coalition is its stated intention to bring the PFI liabilities onto the national balance sheet. Gordon Brown pushed these vehicles at a time when, in the private sector, equivalent con-tricks had already brought down Enron. Sophistry then didn’t alter that fact that they were con-tricks, disguising public liabilities, and they still are.
But will they be undone? If we could have seen how much PFI was going to cost us, we probably wouldn’t have done half the deals that were done. The argument that private-sector management would invariably do a better job than the public sector was inherited from the Thatcher years, and it always looked suspect: it’s a matter of incentive, not how it’s owned, that makes the difference, and public servants are usually willing to do a better job for less than their private sector equivalents because they believe in public service.
The biggest scandal in the PFI deals was the amount of money that was spent on advisers, who were basically being paid to advise how to conceal the full extent of public liabilities down the line.