The Hootsmon has its faults but today’s piece from David Maddox on government debt could not be more timely, coming, as it does, on the back of the worst day for the FTSE for three years. To say that investors are serene at the prospect of a double-dip recession is to say the unions are relaxed about public sector budget reductions: it just ain’t so.
Nothing so characterised Labour dominated CoSLA and its Scottish council members through the late nineties & early noughties as their ‘dugs-at-broth’ enthusiasm for the most reprehensible wheeze that Chancellor Brown and his Treasury mandarins ever came up with: the Public-Private Partnership (PPP), more recently rebranded as the Private Finance Initiative (PFI).
That the enthusiasm with which the 1997-2010 Labour governments embraced this Tory concept was not drowned out by the noise of John Maclean, Bevan and Atlee spinning in their graves came as a shock to me. But when you look at the sheer advantage at local level—schools, libraries, hospitals being built and the real cost landing years down the road, what “see whit ah’ve done fur yez” councillor wouldn’t fall over one another to pass the necessary resolution through city hall to take credit for a split-new Auchenshoogle Community Centre.
As an idea to involve private finance in providing public buildings, it has some merit. But, as a vehicle to shift public borrowing off the books and claim that the debt does not show on national statistics, it is voodoo economics of the worst kind. It is the equivalent of the fifties’ ‘never-never’ when working people got their first telly or decent sofa or fridge on the agreement to pay for it over five years. After three it was worn out…but the payments were still due.
Bad enough that this subterfuge was foisted on a buoyant economy—such as Chancellor Brown seemed to have achieved when he ‘banished boom and bust’ through his ‘fiscal prudence’. Aye, right. But the unravelling of foundation-less fiscal cloud-cuckoo-lands like junk mortgage’ products that laid HBOS, RBS, Northern Rock, Bradford & Bingley—not to mention Lehman Bros—low in 2007-8 has piled public debt higher than in the worst days of wartime when the once-mighty UK almost went broke.
But this PFI gubbins is still lurking in the background. Nobody at Westminster has had the nerve to point to this particularly translucent suit that Emperors Brown & Darling passed on to Emperor Osborne. The ‘financial difficulties’ of 2007-8 with which we are wrestling revolve around the £160bn extra debt the UK swallowed to bale out the (still-shoogly) banks. Taking the PFI debt out of the closet puts that number closer to £200bn.
It’s never pleasant to shed imaginative, ethereal gossamer attire and pull on a hair shirt. But it’s time the UK government stopped ignoring this major component of our pain—and the Labour party showed some spine and admitted that its profligacy has made this whole mess that much worse than it needed to be.