|The Treasury Christmas tree|
PFI works in a convoluted Byzantine way that only an accountant could dream up. Say the government wants to build a new school or hospital but doesn’t want to borrow the money and thereby appear to add to the national debt, it does a sneaky little trick of going to some nice money lenders and asking them to build the school or hospital. In return the money lender gets a juicy contract to rent the building back to the government and provide all the services required to go with it.
Now, moneylenders aren’t known for their philanthropic gestures so the government has to offer them a pretty big carrot to get involved. Imagine a carrot that’s taller than Mount Everest and juicier than a ripe papaya; that’s the sort of carrot we’re talking about. To get the PFI companies ‘on side’, the government agrees to grant 30-year contracts to run and maintain these new establishments. Kerrching!!
So far, the government has managed to secure £60 billion of new public assets via PFIs, at a bargain cost of just £260 billion. The PFI schemes have produced a veritable torrent of cash for the providers of these dodgy financial instruments.
Let me give you an example of what I mean. When Gordon Brown wanted to tart up the Treasury, rather than taking money out of general taxation which he was far too busy hosing over his client state, he got a PFI set up to finance the whole thing. The deal meant that the company running the PFI would be responsible for everything that happens to the fabric of the Treasury buildings. This is something that the new Chancellor, George Osborne discovered a couple of weeks ago when the estimate for providing the Treasury’s Christmas tree dropped on his doormat. The Chancellor was staggered to see that the PFI firm responsible for the Treasury was going to charge a whopping £875 for erecting and decorating the tree.
Understandably, the frugal Old Etonian was livid so he instructed his top mandarin to pop out to B&Q and buy a £40 tree and have that put instead. “Sorry, no can do,” said the man in the bowler hat. "It’s PFI rules," he explained. Anything that needs erecting in the Treasury – be it a light bulb or a Christmas tree – is now the responsibility and the purview of the PFI contractor. It’s all there in the small print on page 187 of the contract that Gordon signed.
George was fuming and ordered a report on the ridiculous situation, only to be told that only the contractor had to put up the tree on health and safety grounds, and that if the Chancellor insisted on bringing in his own tree then the contractor would refuse to water it, turn the fairy lights on and off and there would also be problems in disposing of the tree on Twelfth Night since it would be classed as industrial waste and would have to be removed in a vehicle that was licensed to remove business waste. EU regulations, guv.
Well, George then threw all his toys out of his pram and the PFI contractor, no doubt anxious to please the new boy, agreed to donate a tree to the Treasury free of charge. However, the contractor refused to decorate said tree, no doubt feeling it had already done more than it should to celebrate the festive season. George's mandarin was duly dispatched to Argos and decorations were procured for a very reasonable £40. Treasury staff then decorated the tree but the contractor bridled at supplying a ladder in order that the star might be placed safely at the apex of the tree. Fortunately, the Treasury’s top mandarin, who had enhanced clearance for health and safety, having attended a ladder awareness course, was able to place the star on the tree himself. Job done.
Now all this PFI chatter may sound a million miles away from the NHS and hospital food, but when you realise the amount of colossal waste and overcharging that goes on in the world of PFI, you can see that billions of pounds are literally being poured down the drain in this dreadful waste of money in many of our hospitals. For instance, the PFI contractor in one of the hospitals I was being treated in charged the hospital a staggering £45 to provide a sandwich to patients outside of mealtimes. So, when patients returned to the ward late for a meal after having had an operation, the contractor got paid almost £50 for turning up on the ward with a cardboard box containing an apple, a dry little sandwich and a cheap low-fat yogurt. And we wonder where all the country’s money has gone.