Sharkish tactics
From Mr Edward Spalton Sir: George Monbiot's perceptive article (Public disgrace, 9 March) shows what a rotten deal the Private Finance Initiative gives to taxpayers and users of public services. He does not say, however, why the Labour government is just as keen on this racket as the 'uncaring' Tories. The answer lies in Brussels.
The EU Stability and Growth Pact limits public borrowing to 3 per cent of gross domestic product. Going over the limit can lead to enormous fines. But capital raised by private contractors is 'off balance-sheet' and will not attract the attention of the EU Commission. In some ways this is rather similar to the accounting techniques used by Andersen. They set up 'partnerships' to keep Enron's indebtedness out of the accounts. Public/private partnerships have much the same function and they come at enormous cost.
Reasonably prudent governments can always borrow money more cheaply than commercial firms, so it is rather like paying a loan shark's rate of interest while having perfectly adequate standing to go to a respectable bank — and the loan shark gets to keep the appreciating property and assets as well, even when the taxpayer has paid the last penny.
Edward Spahon
Etwall, Derbyshire
Previous page
