Of course it’s worse if they do understand this

Rachel Reeves has been urged by 40 Labour MPs to drop plans to fund NHS buildings with private finance initiatives (PFI) that would saddle the health service with debt.

Of course the process has been abused - we are talking of politics here so of course it will be abused. But there is actually a - good - reason to use this sort of contract other than being able to spend without increasing the nominal national debt.

Politics is appallingly bad at maintenance. Upkeep, repair, the usual process of keeping something shipshape. We can see that just in the pothole count alone. The real and underlying point of PFI was and is to roll up both the construction cost and the decades of maintenance into the one contract. Not so that it may all be done by private interests or to the profit of private capital. But so that those necessary maintenance activities - and bills - are something protected from poaching by politicians on the lookout for money they can spend on the next new thing.

This insight is indeed public choice economics. Those in government, in power, have their own incentives. And every Minister prefers gurning over the red ribbon and scissors of a new project than they do signing off on the repainting of the basement and a re-tile of the communal showers. That’s just the way life works. So, remove from them the temptation of not re-tiling through budget diversion and the world will be a better place.

The Labour MPs, including Cat Eccles, Clive Lewis and Rebecca Long-Bailey,

Well, yes, it’s perfectly possible to assume that these few don’t grasp this point. But it would be worse if they did, right?

Tim Worstall