Leading PFI/PPP companies including Innisfree, Semperian, Serco, Skanska, Balfour Beatty, HSBC, Lloyds and RBS are being urged to hand some of the earnings they make from the Private Finance Initiative and Public Private Partnerships back to the taxpayer.
The PFI Rebate Campaign, supported by in excess of 50 MPs, is seeking to persuade the beneficiaries of New Labour’s PFI mania to hand 0.05% of their PFI payments back, raising an extra £500m a year which could be ploughed back into local services such as schools and hospitals.
The campaign’s website [not yet live on Tuesday night] argues the case for a rebate and puts the spotlight on the more egregious PFI deals.
The campaign is led by Jesse Norman, Conservative MP for Hereford and South Herefordshire, who first suggested a PFI rebate in connection with the Hereford Hospital PFI, in a House of Commons debate in July.
Speaking at the launch Jesse Norman MP said: “Under Gordon Brown the decision was made to push PFIs wherever possible, putting huge pressure on schools and hospitals to contract out not just on the construction process but also on long-term provision of services. The PFI obligations taken out on Mr Brown’s watch now total over £200bn, and will cost this country for decades. We are seeking a very modest saving of 0.05% on the payments under PFI.
Norman said in his maiden speech in the House of Commons on 14 June 2010 that the coalition’s task was to remedy “not just a colossal failure of governance in the past 20 years but also a colossal failure of thought.”
“Even Edmund Burke would agree that we need a revolution on how we think about economics in government. Over the past two decades, British government has become steeped in a 1970s caricature — a view in which markets are always efficient, prices reflect perfect information, and institutions are nowhere to be found.
“The deep assumption remains that human beings are purely economic rather than social animals …
“Now is the moment to re-examine these assumptions. Politics is not a subset of economics, and economics is not a subset of the financial sector … We need a new economics in our government, not the dessicated economic atomism of the old textbooks, and we need to see people for what they really are, as bundles of human capability, creative, dynamic and fizzing with imagination and potential.
“If we do this —and only if we do this — then we can revive our economy on a huge billow of human energy, one that is barely conceivable within our current economic conventional models, and we ca help to restore the trust and mutual respect that our society so badly requires. It was John Maynard Keynes who once warned politicians not to be the slaves of some defunct economist; so let us all cry freedom and move on.”
Norman said that since the likes of Innisfree, Semperian, Skanska, Serco, Balfour Beatty, HSBC, Lloyds and RBS have prospered handsomely from PFI over the past decade it is not asking much that they should give something back to give greater momentum to the UK’s economic recovery. “In these difficult economic times, no-one should be exempt.”
This blog post was published on 30 November 2010
PFI investments end up being owned by the same pension funds and long-term investors who love owning infrastructure assets; generally the trustees of such funds are obliged /not/ to give up earnings out of the goodness of their hearts.
Thanks. Fair point. Presume this means they’re unlikely to succumb to pressure from Jesse Norman’s campaign then?
I’d put money on it. e.g. HSBC’s only involvement in P^3 deals (AFAIK) is through the listed investment trust, HSBC Infrastructure (ticker HICL). Can you imagine the board of an investment trust deciding to give up some of its earnings because some MP decided they were “unethically” high? Lawyers, shareholder revolts, and “fiduciary duty” spring to mind… it’s just not going to happen.
(may be interesting to note that HICL is losing the HSBC branding in the new year)
I sympathise with Norman’s concerns but the campaign seems naive. If the government is getting such a poor deal it should buy out the contracts and/or renegotiate, not beg for charity.