privatisation -- PFI / PPP: C / D

private companies have cooler logos

PFI- Because it means governments don't have to put up taxes or borrow money NOW, they can let some other government get stuck with it LATER. Also I think because economists are dicks.

PPP- dismantling the state just when we need it more than ever. Dud.

both vile ways of disguiising borrowing whilst making it vastly more costly.

it makes things look like free until they are obviously ninety times the opposite.

I don't understand how anyone could think that this is a good idea.

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But but but RJG, you are a wise observer of the human condition in brief sentences, and surely you have noted that people are often feebs.

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Gordons says:

In my view the Private Finance Initiative is in the public interest. It must be right that government seeks to secure, over the long term, the most cost effective infrastructure for our public services. PFI enables us do this by binding in the private sector into open and accountable long term relationships with the public sector aimed at securing a proper sharing of risk and access to private service managerial expertise and innovative ideas to secure better public services.

dud - having first studied and then temped for a company specializing in privatizing social services, i know firsthand how dudly this can be for all parties involved, clients and workers alike. not only are services inconsistent and the work low paid, it also puts into play all the other problems of private companies dealing with sensitive material: privacy, etc.

in short, maximus is a traveling fraud show.

under budget, under-thought and under here.

How else should the country pay for great big infrastructure projects though? And most of the risk is transferred to the private sector instead of the state. And hospitals in particular come in on budget. I still don't like it though.

Privatised hospitals Privatised water Privatised electric Privatised gas Privatised buses Privatised railways Privatised garbage Privatised jails
I hate you I hate you I hate you I hate you I hate you I hate you I hate you I hate you
Privatised pensions Privatised airports Privatised dentists Privatised coal Privatised ferries Privatised housing Privatised telephones Privatised nuclear power
I hate you I hate you I hate you I hate you I hate you I hate you I hate you I hate you

Privatised businesses have shareholders
who expect to make personal gain
from their stake in essential public services
infested with junior-rat management...
and people wonder where
all the fucking money's gone.

but doesn't the state end up assuming the debts when the private sector firm goes belly-up?

xpost

and the article i read the other day said that transport privatisation was running at a £100 million loss and would only continue to hemorrhage more money in future, so where's the logic in that?

lauren otm -- the main problem is not "ideological" (ie "the state" is not an efficient or reliable provider) but very practical: the risk is all to the public purse. the givernment will always bail out "failing" pfis/ppps.

private service managerial expertise and innovative ideas to secure better public services.

this is the Big Lie. i worked in an nhs strategic health thingum (the names change annually) and top level staff were all from the private sector and had not one idea about a health service or the running thereof. the myth of business=efficiency is central to the new labour project.

But the shareholders aren't taking the money out of the public purse and diverting it away from the public services. A company gets paid to build and operate a hospital for instance. The govt pays the Trust to pay the PFI consortium. It's in the consortium's interest to deliver the service because otherwise they don't get paid. The "personal gain" isn't the government's money, it's from refinancing debts. And the Trust gets 30% of the refinancing cashback, which is a fair bit considering it's the priate sector that's taking the risk (.e. if it goes wrong, the company has to deal with it.)

That's the good bit about PFI. The reasons it doesn't work in practice all the time is because it's also in the PFI consortium's interests to keep the costs down so they cut corners. And I also like common ownership of the means of production cos I'm like that.

If a PFI contractor goes bankrupt the banks step in and the service is delivered by a different contractor. xpost.

AFAIK that is. Has that actually happened anywhere?

if a pfi hospital was going to fail, surely the government would step in and stump up. it'd be political suicide otherwise. otoh, government ownership is not common ownership. or even public ownership in any meaningful sense.

the country still pays for the great big infrastucture but in installments that aren't actually buying the things. how economic is it to rent a flat as opposed to owning one? OK, I rent a flat because I can't afford to buy one but where I live is a bit more flexibile than the demand for public services.

what's the risk? going over-budget? there are a few ways to avoid that and, unfortunately, the easiest is to not do things properly.

who is going to put money in, to fix things, when the things that weren't done properly start to effect the use of these projects? I don't think it is the private sector.

tax, of course. if taxes were raised, to pay for things that would, otherwise, be PFIs, then we could complain about that, when things go over-budget, instead.

lots of crossposts

if pfi consortiums are so into keeping costs down, then why have rail profits gone from profit to loss since privatisation? this kind of thing makes absolutely no sense to me.

xposts

I know the difference, between "effect" and "affect", btw.

they don't use PPP/PFI much, on the continent, do they?

not for transport, anyway, I think.

i get the impression that at least there's dialogue about privatization in the UK, whereas here in the US it's considered a de facto done-deal. sucks.

the dialogue seems like:

"this is what we're doing, now"

"oh"

unless you're an activist. then it's probably like:

"this is what we're doing, now"

"oh, no, it's not"

"it is"

"oh"

oh

i was about to post something saying what rjg said, basically, but not nearly as well.

All the reward is preivatisation, and the risk nationalised; consider the various rail franchises. The DTR has stepped in on several occasions to bail them out; there is no risk being borne, because these are all essentials which the state has to step in and provide - this is the fundemental myth of the enterprise.

If risk isn't being transferred, then it simply comes down to value of the borrowing - this is massively more costly, not including the various costs in tendering, contracting, managements and negotiation. And why?

Because the City (whoever they be) decree that too high a PSBR is a bad thing and start panicking and accusing Labour of being all 'tax and spend'. So much for democratic government eh?

stencil - like that recent study about how hundreds of millions of £s have been wasted w/r/t to the london underground project? that looks it's going to have zero effect.

It would be political suicide not to keep the service running, yes. But it would make no sense for the government to start running the cleaning, maintenance, catering, car parks etc when there are already contracts with private sector companies (who would sue the govt if they tried to step in and terminate their contracts). The hospital wouldn't fail in that sense. If a member of a PFI consortium goes bust, another member is found to replace them by the banks. It would probably be illegal for the govt to prop up a failing private sector company although I couldn't say definitively.

I didn't know rail profits have gone from profit to loss since privatisation. I was under the impression that British Rail ran at a loss. Although I'm probably wrong.

who is going to put money in, to fix things, when the things that weren't done properly start to effect the use of these projects? I don't think it is the private sector.

It is. That's the point. If they fuck up, they have to pay for it.

I'd like to point out that I still don't like privatisation. I just don't think that PFI is a mess for the reasons cited here. It is a mess though. The reasons include the absence of standard payment mechanisms and the fact that the PFI consortia aren't always fined/deducted as much as they could be for fuck ups. And the fact that people confuse Thatcherite national industry privatisations with PFI. They're similar only in that they involve the private sector. But private sector companies have always been subcontracted by national industries to an extent. PFI is an attempt to expand that and make the rules tighter. The phrase "teething problems" doesn't begin to cover it though.

we are living in a society!

hm, well lauren, at least there was a study. privatization and deregulation (not quite the same thing, but similar obv) have long been hailed by both democrats and republicans, and it's distressing.

and the recent public inquiry into glasgow's new motorway extension that was demanded and given and ended up saying "we don't think it's a good idea" and work is set to start next year.

crosspost to lauren's

xpost to stencil: i'd say that the failure of republicans to get SSI privatized despite Democratic Fabianism means that not everything can be privatized and that democracy still works sometimes.