Tuesday, November 29, 2011

Who's Getting Rich On Your Money?

David Metter makes "a killing" out of UK taxes every year
BBC One, 28th November 2011

Last night’s Panorama was a generally well-organised attack on Private Finance Initiatives (PFIs) – which allow already hugely wealthy business people to "make a killing from the taxpayer", and derive "unelected, unaccountable" power from their loans to the government. However, presenter John Ware lacked the final touch, and did not sufficiently explain why PFIs are promoted by key sections of the ruling class.

According to the programme, PFIs now account for £300 billion of investment in the “backbone of civic life” – most prominently hospitals and schools. Private companies raise the funds for construction and fitting, and then usually win the contracts for cleaning and maintaining them, as well as repayments at huge interest rates over a thirty year contract. These massive payments often rise with inflation, and must come before any new equipment is bought, or a single worker is paid. In other words "they buy now, we all pay later."

Typically, operational PFI hospitals have to shell out one fifth of their income in loan repayments every year. It's little wonder that David Metter, the head of a PFI business who personally skimmed £8 million from the government last year, claims that "UK PLC got a good deal". Yet even the fiercest political critic on the show, former Labour minister Margaret Hodge, believes that even though it wasn’t a good deal, "What the public have got is hospitals and schools built that would otherwise not have been built." On a similar line, Dr Mark Hellowell, who lectures in health systems and public policy, takes up Margaret Thatcher’s old ‘there is no alternative' narrative when he claims that "There is no realistic public option for almost all of those schemes. There simply isn’t the capital available in the Department of Health."

This is exactly the case which the Department of Health and the Treasury have been making in Liverpool for a number of years, as bosses scrambled to replace the decaying Royal hospital, once voted the "ugliest building in the city". Yet the programme shows that in December 2009, "PFI was found to be significantly more expensive". According to former Department of Health advisor Andy Black, "they must have been desperate" at that point.

Small wonder then that the study was repeated just four months later, and Ware shows that this time the figures were "manipulated". Essentially, the calculations were based on the bizarre assumption that the lender would accept "lower profits than almost every other PFI deal, and even then PFI only scraped home by a whisker" – 0.03%.

The Royal definitely needs rebuilding, but where should the money come from?
Merseyside’s Keep Our NHS Public group believe that an outright government-financed hospital would cost significantly less, allowing Liverpool people an extra £15 million more healthcare per year for the next thirty-four years – more than the length of PFI contracts. Dr Alex Scott-Samuel equates this money to "nearly two hundred fully staffed beds or five hundred nurses – clearly a lot of healthcare."

The politicians continue talking tough on PFI in opposition, and then equivocating once they get into power. Why? Wade attributes it to the realities of getting to grips with practical politics, before revealing that many of the PFI ‘advisors’ in government have themselves made fortunes from the practice. But then surely another question follows – why would governments allow such people to be appointed to such positions in the first place?

The PFI issue should not be considered in isolation from the other fiscal measures taken by governments promoting ‘austerity’ for the vast majority. Instead, they are part and parcel of the steady erosion of the public sector, and its turning over to those who would profit from our basic needs. John Major’s original establishment of the scheme happened in the context of tax cuts and deregulation for the wealthy, as the UK government sought to increase profitability in an ever more globalised world. Politicians in all other industrialised nations took similar measures. Tony Blair championed PFI because he was even more committed to enriching the wealthiest, who are now lavishing money on him. George Osborne might finally be having a "reassessment" of PFI, but we can bet that he won’t soon advocate taxing the rich to pay for hospitals and schools.

As ever, despite the orthodoxies of ruling class mouthpieces, there is an alternative. But let’s forget the fiction that tax revenues are "our money", as if we give them up voluntarily. Tax money is extorted from us, and then funnelled up towards the super-rich elite. As a working class, our urgent task is to turn the tables on the parasites.

Who's Getting Rich On Your Money? can be viewed on BBC iPlayer.
Read a Merseyside Keep Our NHS Public statement on the Royal here.
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