Buddy, Can You Spare a Dome?

You have to hand it to Tony Blair. Not only did he shrewdly sidestep the coming fiscal storm in 2007 but then dropped from public scrutiny straight on to the six-figure speaker circuit and hasn’t looked back since.  Sweet. What has helped is his deeply pragmatic view of politics. Though he does not have his public enemies to seek, they are fewer and less vitriolic, compared to the only other 20th century politico hate figure—Margaret Thatcher.

That Thatcher-bashing remains a favoured sport can be explained by her steely vision and inability to compromise,. Whereas Blair, in many ways, went further—reinventing Labour as friend to patrician and proletariat alike, once you bury your principles, it’s much harder for media and/or enemies to pin you to a given point. Thatcher’s mistake was to settle for recruiting the middle class to her standard, leaving most workers thirled to Labour. Blair, on the other hand saw he could take their loyalty for granted while he wooed both the middle class and arriviste rich created by Maggie’s City ‘Big Bang’ and housing bubble.

Even though the hapless Irn Broon reaped Blair’s whirlwind head-on, even he got away with his rape of prudence as chancellor—raiding pension funds; letting the FSA doze at the wheel; inventing social benefits without worrying about long-term financing; pushing PFI (onto councils especially) to keep borrowing off the books and pork-barrel flowing.

In office, Blair was happy to bask in the glow of popular developments, London infrastructure and socially progressive schemes funded by government spending doubling from £250bn to £500bn on his watch. Brown sang descant, milking money left, right and centre. Because everyone’s house prices/salaries were rising, nobody questioned bonanzas. Blair may have stolen much Tory policy thunder but business beamed; ‘Ethical Foreign Policy’ was simply a cover for selling anything to anyone, provided all kept quiet and didn’t rile the Americans.

In those days almost everyone felt they were getting richer and Blair deserves acknowledgement for creating such feelings. He appeared to do this by speaking to voters over the heads of parliament and party with a presidential omniscience that lasted over a decade. It was still intact when he body-swerved out of the limelight. Once the lugubrious Brown was in charge, the Bambi shine went all dull. Yet, despite borrowing to sustain it all when the infinite-money-illusion collapsed, Brown slid off to Kircaldy-les-deux-Églises un-pilloried, if not unsullied.

Blair was not just gifted, his timing was flawless. Brown may claim to have produced over a decade of affluence and growth but mostly he just indulged himself on the proceeds and milked the image of a dour, bankerly Scot as the right man for the economy. People only dimly perceived the extent to which the (then-new) army of spin doctors manipulated  news. Alastair Campbell, Charlie Whelan, John McTernan had a field day selling devolution, peace in Ulster, national minimum wage, saving the NHS and local council education, bringing unemployment down, introducing tax credits, etc, etc.

While some of his team like Mandelson and Irving lost touch, Blair never fell into the trap of hubris, never made McMillan’s mistake of telling people they’ve “never had it so good”. He even managed to deflect criticism by putting Mandelson in charge of the ill-fated Dome as a kind of lightning-conductor, deflecting criticism away from his boss by getting guacamole on his face. Just as well; the NAO slammed the project as a £1bn disaster.

This may have been the highest profile of many profligacies in which Blair indulged. But the one that did  most damage—especially in Scotland—was to revamp the Tory dosh-for the-boys PPP scheme and relaunch it as PFI. Worse value than normal public procedure of borrowing off the PWLB at rates below anything a private company could, it did not show  as government debt. Public bodies like councils doing the borrowing were bluntly told it was “the only game in town” and to find extra money required by themselves.

So detached was this wheeze from socialist principles and damaging to the public sector that its biggest union came out against it and in 2007 published “At What Cost” a report on the aggregate costs of PFI/PPP projects in Scotland. As these contracts last 30 years and take precedence over any other fiscal priorities, such contracts are now playing havoc with  councils’ ability to deal with any fiscal belt-tightening in a balanced manner. In the Executive Summary, Unison points out:

  • Total PFI contracts active in Scotland total £20bn, mostly in councils and NHS
  • Scottish PFI/PPP contracts could be costing around £2.1bn more than conventional funding. That’s twice the spend on the Dome with nowt to show for it.
  • Analysis of official figures from 35 schemes found that estimated public sector
    comparators (PSCs) were 6.4% cheaper than the contractors’ bids.
  • An incredible £3.5 billion ‘insurance’ policy is effectively paid to the private sector to cover risks of things going wrong with the contracts, despite risk being effectively retained by the public sector.
  • None of the above figures take account of higher financing costs in the private sector; Audit Scotland says this could be as much as 10% of total costs in early PFI schools.

It is notoriously difficult to get detailed financial figures for many PFI/PPP schemes due to claims of ‘commercial confidentiality’. Despite approving funding for these schemes, the Labour Scottish Executive of the day claimed it did not actually hold many of the key documents. Details of many of those it did hold are redacted due to commercial confidentiality; other public bodies withhold financial information on similar grounds.

In order to prove that PFI/PPP supposedly provides good value for money a notional risk adjustment is added to the PSC. This usually takes the estimate higher than the PFI/PPP contract. This like an ‘insurance’ policy against problems such as time and cost overruns.
Yet any Minister worth their salary would be able to negotiate a far cheaper policy than
the total estimated £3.5 bn in risk adjustments.

“Unison Scotland estimates the total sum wasted on PFI in Scotland at £5.8 billion, taking into account the whole range of factors listed above.”

So, while many of the New Labour persuasion still think fondly of Blair as the man who won three elections on the trot for the first time in their party’s history and as many of his detractors vilify him for finessing UK into the Iraq War with scant moral justification, his true legacy in Scotland is that he robbed at least two generations of adequate public capital investment just to buy himself glory in those three election wins. I doubt he loses sleep over thinking about what that £5.8bn would buy for Scotland. The answer?:

  • 29 hospitals the size of ERI
  • 244 inner-city high schools of 1,300 pupils (including full S6)
  • 3 new Forth Crossings
  • 2 Denver International Airports (newest in US & 5th-busiest airport in the world)
  • Build Phase I and II of EGIP and upgrade Aberdeen line to express standard—then have the same amount again to revolutionise Scotland railways
  • Dual A9 Perth-Inverness & A1 Dunbar-Berwick, upgrade A96 Inverness-Aberdeen
  • Pay independent Scotland’s share of UK’s £1.5tn debt for first ten years

Or if you prefer to think the way Blair, Mandelson et al thought: 6 Millennium Domes.

About davidsberry

Local ex-councillor, tour guide and database designer. Keen on wildlife, history, boats and music. Retired in 2017.
This entry was posted in Commerce, Politics. Bookmark the permalink.

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