In October 2018 the government stated no more PFI agreements would be signed
So what now?
- Thread starter Sharpend
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My personal view of PFI (Profit for Investors), is that they are off balance sheet long term rental agreements including all servicing and maintenance. Why Governments off all colours didn't simply borrow cash, build these buildings, then get them maintained on short ish agreements , so that the providers can't tug the pants down on the tax payer is beyond me........
totally agree, it's like these equity release schemes, borrow about 20% of the value of your house and find you don't have a house to leave your kids when you die.
In theory it's like getting a mortgage, someone else gets to pay for the maintenance of the building and the financing of building it, but whoever signed up the contracts must have had a very faulty calculator and a very poor grasp of maths! Figures are something like £13billion borrowed for new hospitals etc, £80 billion to be repaid over the time span to 2050. In the past, with inflation running at highish levels, the money would have been 'of less value' but as interest rates are low / virtually zero, the capitol borrowed doesn't devalue so much...
At the time 'outsourcing' was very popular. Wherever I worked and outsourcing occurred, it was only cheaper becuase the staff got paid less, and did less work! Net result poor service, or it worked out more expensive to provide the same level of service prior to outsourcing.
In theory it's like getting a mortgage, someone else gets to pay for the maintenance of the building and the financing of building it, but whoever signed up the contracts must have had a very faulty calculator and a very poor grasp of maths! Figures are something like £13billion borrowed for new hospitals etc, £80 billion to be repaid over the time span to 2050. In the past, with inflation running at highish levels, the money would have been 'of less value' but as interest rates are low / virtually zero, the capitol borrowed doesn't devalue so much...
At the time 'outsourcing' was very popular. Wherever I worked and outsourcing occurred, it was only cheaper becuase the staff got paid less, and did less work! Net result poor service, or it worked out more expensive to provide the same level of service prior to outsourcing.
The key is “off balance sheet” therefore it’s not Goverment debt.
UK student debt is now included as Government debt .....
good point, I had forgotten about that.
