Denseman on the Rattis

Formerly known as the Widmann Blog


Brown must have believed what he was saying to impose PFI

The PFI Banana
Originally uploaded by Manic Street Preacher

I always thought that Brown decided to impose PFI deals throughout the public sector for two reasons: Firstly, to prevent the Tories from imposing swingeing cuts next time they were in power, and secondly, to hide the real size of public-sector debts (because PFI deals originally did not show up on the balance sheets).

However, it always puzzled me why he didn’t consider it problematic to impose fixed future payments on entities whose future income was unknown.

Today there was an article in The Telegraph that cleared that up.

Basically, Brown must have believed his own propaganda, in particular that he had abolished boom and bust. That is, he expected the public sector to grow forever, without any recessions that would cut budgets. As it says in the article, “[it] is a bit like taking out a pretty big mortgage in the expectation your income is going to rise, but the NHS is facing a period where that is not going to happen”, and “[the PFI deals] were planned for a different world. I’m sure that in some cases people feel their hands are tied.”

It turns out that Brown was wrong again.

Rather than protecting public services under a Tory government, the PFI deals are making the cuts worse because such a large part of the outgoings cannot be touched.

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