Tuesday, September 02, 2008

57 Billion PFI Borrowing Black Hole

The true extent of the New Labour's smoke and mirrors economic sham is revealed in figures which show that £57 billion has been kept off the public spending balance sheet by using PFI schemes. 

Public Financial Initiative (PFI) contracts use public money to allow private firms to build such things as hospitals and schools, which are then forced to enter into long-term contracts with the private firms to operate them. So the initial cost doesn't appear as public spending.

And, according to the BBC, the commons public accounts committee said many authorities were "not doing a good job" of managing the PFI schemes.

Matthew Sinclair, of the Taxpayers' Alliance, said: "Only if services are taken out of the hands of politicians and bureaucrats entirely, and control handed back to civil society, will this waste really come to an end."

There are now more than 500 PFI projects with a combined capital value of £57 billion, according to the committee.

PFI schemes are just one of a number of economic accounting measures used by the government to keep public spending off the balance sheet and allow the government not to bust its 'golden rule' on borrowing. 

In July, it was highlighted here how we are living in cloud cuckoo land on borrowed time with borrowed money. Brown, spun as the prudent chancellor, helped create and rode on the back of the economic good times, with a false feel-good factor. 

The current economic crisis is an accident waiting to happen after living for a decade in an economic fantasy world.

For years, the government propped up an ailing economy by borrowing, keeping public spending off the books and  creating a consumer debt culture. 

Whether you believe Darling or Brown, we are not well-placed to weather the economic storm. 

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