New Communist Party of Britain
Since the mid-1990s the British ruling class’s preferred mechanism of privatisation has been the Private Finance Initiative (PFI).
Since PFI was introduced more than £70 billion of private capital has been used to build and run hospitals, schools and other public facilities. It is estimated that the repayments to the issuers of this private capital will, by 2050, total £240 billion, with owners expecting 10-13 per cent return on capital every year.
It has been estimated that more than £4 billion has been paid in arrangement fees to financial consultants, lawyers and others.
To justify PFI the Government explained that it would reduce its borrowing costs. In fact it has been found that the borrowing costs for the initial capital outlay have been an extra £25 billion over and above what it would have cost had the Government borrowed the capital directly. This extra cost has been distributed as profits to the banks that loaned the capital and the companies that run the PFI schemes.
Hospitals were built on the assumption of rising health spending, but with cuts in health spending at least 22 PFI hospitals no longer look financially viable. In June 2012 South London Healthcare trust was declared bankrupt; this might be the first of many. To stave off or delay bankruptcy attempts are made to increase productivity. As the work in hospitals is labour intensive the only way they can increase productivity is by reducing the workforce and by making those who remain work faster by using bullying, discrimination, harassment and other sharp practices.
Even if the hospitals are declared bankrupt or whether the clinical services they provide are cut back, the payments to the PFI owners are guaranteed. Increasingly ownership is being packaged up into financial instruments like stocks, shares and bonds and then sold on; at least 90 projects have been moved offshore to avoid paying tax.
The NCP will campaign for those companies privatised since 1979 and for those services that have been subject to PFI or private sector delivery to be restored to the public sector.