Collapse of Carillion into Administration Another Nail in the Coffin of the Private Finance Initiative

Stricken PFI outsourcing company Carillion has collapsed into liquidation this morning, threatening to plunge small businesses in its supply chain and public service provision across hospitals, schools and prisons into chaos.

Questions must now be asked of Government and the UK Treasury, which has acted as a champion of rip-off PFI schemes since day one – why Carillion continued to be awarded large Government contracts? even after the scale of its financial woes became clear in 2017? 

38 degrees petition launched by John Burgess calling for Carillion to be nationalised and public services and jobs protected has attracted over 1400 signatures, with many signatories expressing horror that UK banks were once again seeking to extort taxpayer funds from Government to bailout bankers largesse.

Asked for comment on why he started the #NationaliseCarillionNow petition, John Burgess said:

“I am angry and saddened by the Carillion story. Angry because politicians have fed the likes of Carillion with public contracts with no accountability or oversight, sad at the harm this collapse will bring upon workers and public services. Government must not hand a single penny to Carillion’s shareholders.”

Polling undertaken by Yougov for Liverpool University on attitudes to corruption and PFI in Britain found that 68% of respondents in England believe PFI deals should be banned. In Scotland, which has the highest concentration of PFI projects in the world, this figure increases to 73%.

Commenting for People vs PFI, campaigner Joel Benjamin said:

“Carillion’s implosion is a timely reminder just how out of step UK privatisation and infrastructure finance policy is with public opinion. PFI deals are rightly associated by the public with crony capitalism and corruption and should be banned. It is always cheaper to finance infrastructure via Government bonds, not high interest bank loans. While John McDonnell’s proposal to nationalise PFI contracts was presented as radical in some quarters, it is entirely inline with public sentiment.” 

“Politicians must start acting in the interests of the taxpaying public, not the overpaid bankers and pinstriped accountants who have taken this country for a ride.”

Professor Stuart Hodkinson of Leeds University added:

“In the aftermath of Grenfell, the need to end the PFI model of public service delivery has never been more urgent. PFI has allowed global investors to extract enormous unearned wealth from taxpayer guaranteed income streams for doing what government could do cheaper, better and crucially more safely.” John McDonnell’s 2017 Labour Conference policy announcement on PFI made it clear any incoming Labour Government would not sign new PFI, signalling a clear break from the cross party neoliberal consensus in place during the Blair/Brown era:

“We’ll put an end to this scandal and reduce the cost to the taxpayers. How? We have already pledged that there will be no new PFI deals signed by us. But we will go further. I can tell you today, it’s what you’ve been calling for. We’ll bring existing PFI contracts back in-house.
  There are two ways to bring PFI contracts back in-house: Nationalising the Special Purpose Vehicles through which public funds are pumped into private pockets – a policy researched and supported by The People vs PFI, and PFI buyouts.

Buyouts of PFI are hugely expensive and private investors can walk away with their money early to invest in more PPPs. Nationalising the SPVs puts the government, not private companies, in a commanding position. Contracts will automatically become public and various forms of profiteering can be ended.

UK taxpayers cannot be expected to pay full price when ending PFI contracts:  poor building quality and fire safety failings evidenced by Edinburgh Schools, Peterborough Hospital and Chalcots Estate, tax avoidance, interest rate rigging by PFI lending banks and excessive profit extraction must all weigh in the final account.
Analysis of the cost of PFI undertaken by the New Economics Foundation found Scotland would have saved a staggering £26 billion on PFI infrastructure outlay of £40 billion with a National Investment Bank funding infrastructure.

Replacing NHS PFI financing with public finance via a National Investment Bank could have saved the public purse around £52bn across the NHS, or as much as £208bn, where replacing all PFI spending UK wide.