Saturday, October 28, 2017

The PFI Loan Sharks

Five offshore PFI )Private Finance Initiatives) companies paid little or no corporation tax during a five-year period despite making profits of nearly £2bn, the BBC has learned.
The five companies specialised in lending money through PFI. They own hundreds of public assets including schools, hospitals and even police stations The BBC has also learned that a small number of big offshore companies are currently on a buying spree. They are buying up a number of the UK's public buildings.
  • Nine off-shore infrastructure funds own between 50% and 100% of the equity in 335 PFI/Public Private Partnership (PPP) projects. This amounts to 45% of all 735 current projects
  • 12 offshore companies have bought equity in 74% of the 735 current projects
  • Education and health projects, including schools and hospitals, account for two-thirds of the purchases by offshore companies.
Dexter Whitfield head of the European Services Strategy Unit which carried out the PFI research said offshore companies were making huge profits from buying public assets, with annual average returns on their PFI investments as high as 28%. But Whitfield said the companies paid little or no UK corporation tax despite making huge profits. He said: "PFI is essentially a private sector profit machine. If the government adopted a strategy of building the public infrastructure directly through public investment and operating it through their in-house services this whole edifice would not exist. "All these transactions are a product of the fact that there is so much money to be made in PFI." Whitfield said five offshore PFI funds made profits of £1.83bn over the five-year period ending in April 2015, but paid little or no corporation tax.
 Many PFI deals are causing headaches across public services, particularly in the NHS. The University College London Hospital's NHS Foundation Trust (UCLH) told the BBC that its PFI debt was far too high, mainly due to interest rate charges of between 7% and 8%. This meant an annual bill of £30m, at least double what he believes UCLH could be paying if the debt was re-scheduled. Professor Marcel Levi, UCLH Chief Executive, told the BBC: "If we spend an enormous amount of money on paying interest rates and this PFI debt, then that's money we cannot spend on patient care, on nurses, on treatment and management systems." And it's money that is not being spent on achieving targets for A&E and cancer waiting times, he added.

No comments: