The fundamental flaw in PFI can be overcome by People’s QE

Posted on

The supposed advantage of PFI is that the risk of contracts going wrong is passed from the government to a contractor.

There are two flaws with this. First, many contracts fail to transfer this risk: in other words cost over-runs are still borne by the government. In that case PFI can best be called an expensive con-trick by contractors on the government.

The second flaw is that in the rare cases when the risk is actually transferred from the government to the contractor, as has happened in the case of Carillion, limited liability lets the contractor fail and pass the risk on to stakeholders throughout society. In that case PFI can best be called an expensive con-trick by contractors on society.

I have long argued there is an alternative. It is, of course, a National Investment Bank funded by People’s QE (which I originally called Green QE).

It really is time for Labour to say so. After all, it’s what helped Corbyn get the leadership, so why won’t he talk about it now?