Stella Creasy Labour and Co-operative MP for Walthamstow & Co-op Party NEC Member for London 16th February 2018 Blog Share Tweet Since 1992 and to the present day the Private Finance Initiative (“PFI”) has been used to finance and operate public sector projects. There are now 700 PFI projects around the UK, including for schools, hospitals, prisons and motorways, whereby the Government borrows from a private company who then constructs and maintains the buildings involved. With £200bn due back to these companies over the coming years for £60bn worth of buildings, PFI is the equivalent of taking out a payday loan to pay for building and running our public services. The annual charges for these deals amounted to £10.3bn in 2016-17 – with around half of this cost being for interest repayments and charges rather than services for local residents. The National Audit Office (NAO) estimate using PFI contracts can make the costs of public building projects 40% more expensive than relying solely upon government money. The collapse of Carillion also shows that those who argued working with the public sector would transfer the risks of building such projects to the private sector were mistaken. Whilst there may be growing agreement that PFI is not something any government should use in future, there is a pressing need to deal with the consequences of these existing contracts. Yet the NAO have also documented how expensive it would to cancel these contracts. This is due to the clauses in the contracts which require the lenders and the shareholders to be ‘fully compensated’ if they are cancelled. In total it could cost upto £220bn – money which would not go into our public services but back to these multi billion pound companies and their shareholders. But that doesn’t mean we can’t act. When many of these deals were signed, the level of tax companies would pay formed a key part of the value for money assessment. Many agreed to pay corporation tax rates of 30% – thanks to Tory cuts to corporation tax, this will fall to 17% by 2020. Experts calculate the companies running 125 PFIs in the NHS have already made a windfall profit of £190m from these changes- and that these companies will make millions more from this tax cut in the coming years as a result. Just eight companies own or have equity stakes in 92% of all the companies holding PFI contracts with the NHS – meaning that there is very little competition between the companies bidding to build and run NHS PFI hospitals. Asking hospitals and schools to renegotiate these costs on their own would be be prohibitively expensive and yield limited savings. In contrast if the Government acted on behalf of tax payers and negotiated with this small group of companies across the portfolios of loans they have made this could generate substantial savings. The NHS is facing an unprecedented funding gap of up to £34bn over the 5-year period to 2020/21. On Wednesday 21st February parliament has an opportunity to vote in support of a windfall tax on these companies- sending a clear message to these companies that if the Government won’t act to address these costs, then Parliament will. Please ask your MP to support amendments 1 & 3 to the Finance Bill to show these legal loan sharks of the public sector we want our cashback for our public services.