One of the joys of Corbynomics is that it’s all largely the invention of Richard Murphy. We therefore know that it is wrong on any specific subject, we’ve just got to work out how it is wrong on any specific subject. Which leads us to the idea that this peoples’ quantitative easing will be able to replace the private finance initiative. The idea being that if the Bank of England just prints money with which we can do nice things then we won’t have to go off and borrow expensively from the hated bankers and kittens will ride sunbeams once again.
The problem with this being that PFI really has very little to do with the price of the finance used to build these lovely things. Sure, bankers get their cut of the interest, as do investors, but that’s really just not the point of it all. Instead, the point of PFI is to get some people into state run projects who are worried about losing all of their money. That is, it’s really about getting equity partners in.
The point of that being that we all know how projects work out if they are funded by the magic money tree. They come in late, vastly over budget and thus waste vast amounts of real resources. And the only way we’ve ever figured out how to introduce some rigour into the management of these sorts of projects is to make sure that someone is indeed sweating over the idea that they could lose all their money. PFI is thus far more about bringing the strictures of value for money, completion on time and to budget, into public procurement than it is about either gaining the finance to build something or the price that is paid for that finance.
Thus, changing the price paid for the finance doesn’t change the argument in favour of PFI at all. Yes, it’s superficially appealing to pay nothing to the Bank of England for the finance rather than 5% to hte City, but compared with things like the 276% cost over run of the Humber Bridge it’s not the point at all.