Why we should include PFI in the national debt
There is much talk of PFI in this morning’s news; the Treasury Select Committee has warned that many Private Finance Initiative (PFI) deals are poor value for taxpayers and the cost of those that have been badly negotiated has shot up.
A huge amount of taxpayers’ money is spent via controversial PFI schemes and Andrew Tyrie, of the Treasury Select Committee, said on Today that whilst taxpayers are “getting ripped off” by PFI schemes they are often not aware how bad the situation is because PFI is not counted as part of our official national debt. The insidious characteristic of PFI deals is that they allow the Government to spend taxpayers’ money without really fully admitting that it’s spending it, or promising to spend it in the future.
We highlighted the importance of counting PFI as part of the national debt in our research paper, The Real National Debt, written in 2010 and using figures for the financial year 2009-10. For the first time we laid bare the startling growth of the real national debt over the last decade. At the time of that paper it stood at £300,000 for every single household in Britain; for most ordinary families it would represent the whopping second mortgage you never knew you had.
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Bringing PFI fully onto the balance sheet and including it in the headline figure of national debt would, at a stroke, add a good few billion to the amount we admit we owe. It sounds terrifying but it’s hugely important that the liabilities for PFI are more transparent; at the moment the true scale of what taxpayers are on the hook for is disguised. Once we’ve faced up to the PFI problem why stop there? Shouldn’t we also look at the huge liabilities we have thanks to unfunded public sector pensions and unfunded state pensions? The debt from bailing out the banks is still very much sitting on our books, add that too and we’re nudging £8 trillion.
Once you get above a few million I think it gets all too easy to throw around billions and trillions discussing these matters. We created this video to try and illustrate the scale of the numbers we were talking about in our report. This useful graphic relates to US dollars but also gives you some serious perspective on what a few trillion looks like.
The Government should be responsible not just for the money that it spends but for the PFI deals that it signs taxpayers up to, because that represents our money or our children’s money.
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1:44 PM 06, Nov 2017 Duncan Simpson
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