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UNION CONDEMNS GOVERNMENT USE OF PFI AS A WASTE OF TIME AND MONEY

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Unison today called on the government to stop misleading the public and come clean on the benefits and value for mo...
Unison today called on the government to stop misleading the public and come clean on the benefits and value for money of PFI projects in the public sector.

Releasing a report* into the progress of 512 PFI projects worth more than£22bn, Unison general secretary Dave Prentis said there was a growing chorus of voices expressing serious doubts about PFI, including the National Audit Office, Audit Scotland, the Kings Fund, Building Futures, Institute of Fiscal Studies, The Commission for Architecture and the Built Environment, and the House of Commons Public Accounts Committee.

Mr Prentis said:

'Government is relentlessly pursuing a policy that wastes money, wastes time and fails any objective test of value for money.

'It's a policy that is squandering the only chance in a generation of renewing our public services. Nor is PFI producing the quality, the design or the innovation that the public expects and deserves from 21st century public services.

'It cannot be right that during a period of unprecedented public investment huge profits are going into private pockets when these funds should be directed at essential public services.

'This is why the trade unions want a moratorium on PFI while a detailed independent inquiry takes place.'

Unison's report, 'PFI: Failing Our Future; A Unison Audit of the Private Finance Initiative', provides evidence that PFI is more expensive than direct public sector borrowing; that there are higher construction and running costs, and huge returns to the private consortiums involved.

The New Edinburgh Royal Infirmary will require the taxpayer to hand over£30m a year at today's prices for 30 years to a business consortium - a total of£900m. If the government had paid for it directly, the cost would have been£180m.

According to the Unison Audit, study after study have shown a deep affordability crisis at the heart of every PFI scheme, with knock on effects, starting with a reduction in resources ie fewer staff (Edinburgh Royal Infirmary); deskilling (Cheshire Police); fewer beds (Wakefield, North Durham, Cumberland); smaller classrooms and fewer facilities (Glasgow schools).

Then public authorities are forced to raid other budgets to meet their PFI obligations ie hospital closures (Worcester and Kidderminster); budget cuts (Manchester Mental Health and Haringey schools).

These costs put pressure on public authorities to find cost savings elsewhere, and labour costs are the main target. Unison is campaigning against the two-tier workforce, which has developed as private operators running public services have eroded the pay and conditions of new staff.

Unison is also concerned at the growing list of government bail-outs of PFI and PPP schemes that have run into problems ie Channel Tunnel rail link; National Air Traffice Service; Norfolk and Norwich University Hospital; Royal Armouries.

The report highlights how the government is coming under increased pressure for using off-balance sheet accounting - the system used by Enron and others to conceal their true debt position.

In one example, a PFI prison in Scotland was neither recorded in the accounts of the Scottish prison service, which is using the asset, nor Kirlmarnock Prison Services, the private sector operator who built it. Despite housing 500 prisoners, financially, HMP Kilmarnock does not exist.

The report finds:

'The key issue is that PFI obscures the actual position on public investment and liabilities. It is being forced onto public authorities as the only way to finance public investment supported by the incentives of PFI credits for local authorities, for example.'

* The full report is available here.

* UNIONS CONTINUE TO SEEK PFI MORATORIUM

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