PFI contracts – windfall tax them says Labour MP who says companies are “legal loan sharks”

Labour MP Stella Creasy on Today programme this morning:

“What the NAO reports shows, to devastating effect, is that PFI and PF2, because the government brought in exactly the same scheme under a different name, is both too expensive to continue on with and very expensive to get out of.

Of that £10bn [the annual charge for PFI contracts] what that study also shows is that half of that is interest on charges. These companies, these type of contracts, really are the legal loan sharks of the public sector. It’s like a payday loan or a hire purchase agreement to build a school or a hospital and then run one. It’s a very expensive way to do it. And the question we all have to ask ourselves is what do we do next.

This is why I’m calling for a windfall tax on these companies. The one place where we do have leverage with them is on the tax they pay. They’ve also had a massive corporation tax bonus because corporation tax on a lot of these contracts [when they] were signed, and it was part of the deal and the reason why we went with them, was around 30%. Under this government it has now dropped to 17%. So we are estimating that some of them have saved around £190m in corporation tax payments alone. That is money that is owed to our public sector, and is money we could get back with a windfall tax.”

“Disgraced Carillion chief now director of firm in charge of inspections at Hinkley Point C nuclear power station”

“Carillion – the firm handed millions in contracts by the Tories – has just gone into liquidation leaving thousands of employees and small businesses facing bankruptcy and redundancy.

In July last year, the man responsible for the debacle – incompetent former Group Chief Executive of Carillion Richard Howson – stood down and seemingly disappeared on the same day the company’s disastrous finances were revealed.

But only after paying himself £1.5 million in pay and tens of thousands in bonuses and perks and leaving the firm with a massive £800 million pension deficit and debts of £1.4 billion of course:

So where is Howson now?

Locked up in a monastery somewhere, contemplating his failures and atoning for his sins?

Surprise surprise.

Here he is, hidden away as a new director of engineering and technical services company Wood Group:

Wood Group has just won a lucrative contract to carry out inspections at the UK government’s new Hinkley Point C nuclear power plant:$16m

EDA Councillor Martin Shaw on the next threat to our local NHS


“Devon’s two Clinical Commissioning Groups (CCGs) are pushing ahead with far-reaching, highly controversial changes to the NHS in the County from 1st April – without alerting the public or even the public watchdog, the Health and Adult Care Scrutiny Committee at Devon County Council.

The changes will turn the Sustainability and Transformation Plan – which itself grew out of the misnamed ‘Success Regime’ which closed our community hospital beds – into a more permanent Devon Accountable Care System. The first phase, in the first part of the financial year 2017-18, will develop integrated delivery systems, with a single ‘strategic commissioner’ for the whole county.

However the real concern is the next phase, which will lead to the establishment of Accountable Care Organisations. These will lead to services being permanently financially constrained, limiting NHS patients’ options for non-acute conditions, and pushing better-off patients even more towards private practice.

Large chunks of our NHS will be contracted out for long periods, probably to private providers. The ‘toolkit’ for this fundamental change talks about ensuring ‘that there are alternative providers available in the event of provider failure’. In the aftermath of Carillion, do we really want most of our NHS contracted out to private firms?

Devon’s public are not being consulted about this change – unlike in Cornwall where the Council has launched a public consultation – and there is no reason to believe that they want a privatised, two-tier health system.

Devon’s CCGs have pushed the change through without publicity, and it is only because I have put it on the agenda that Health Scrutiny will have a chance to discuss in advance of April 1st. I have written a 7-page paper for the Committee outlining what we know about the ACS and posing eight questions which they should ask about it.

Martin Shaw
Independent East Devon Alliance County Councillor for Seaton & Colyton”

“Turning offices into homes threatens affordability – study”

“LGA estimates more than 7,500 affordable homes lost in England due to conversions that do not go through planning system

More than half of all new homes in some areas have been created by allowing developers to convert offices without building any affordable homes, an impact study of the policy has revealed.

Since 2015, 30,575 housing units in England have been converted from offices to flats without having to go through the planning system, in a bid by ministers to boost housing supply. It means there has been a potential loss of more than 7,500 affordable homes, according to the study by the Local Government Association.

Such office to residential conversions under permitted development rules in place since 2013 accounted for 73% of new homes in Stevenage during 2016-17, the LGA said. In Nottingham, Basildon, Newcastle-under-Lyme, Hounslow and Harlow the figure was more than half.

Last year the Guardian revealed plans by the London borough of Barnet to transform its former head office into 254 flats, some of which are to be 40% smaller than a Travelodge bedroom and have been labelled “dog kennels” by critics.

Across England and Wales, 8% of new homes since 2015 were created by the change of use in office buildings. Councils have warned that “office space could dry up as a result, leaving businesses and startups without any premises in which to base themselves”.

Martin Tett, the LGA’s housing spokesman, said: “Permitted development is detrimental to the ability of local communities to shape the area they live in. Planning is not a barrier to housebuilding, and councils are approving nine in 10 planning applications. But it is essential that councils, which are answerable to their residents, have an oversight of local developments to ensure they are good quality and help build prosperous places. The resulting loss of office space can risk hampering local plans to grow economies and attract new businesses and jobs to high streets and town centres.”

The Department for Housing Communities and Local Government defended the policy. “We are determined to build the homes our country needs and permitted development rights play an important role in helping us deliver more properties,” said a spokesman. “We need a mix of dwelling types to meet different housing needs and over 17,500 additional properties were created by converting offices in the year to March 2017.”

“Taxpayers to foot £200bn bill for PFI contracts – audit office”

“Cost of privately financing projects ‘can be 40% higher’ than using public money

Taxpayers will be forced to hand over nearly £200bn to contractors under private finance deals for at least 25 years, according to a report by Whitehall’s spending watchdog.

In the wake of the collapse of public service provider Carillion, the National Audit Office found little evidence that government investment in more than 700 existing public-private projects has delivered financial benefits.

The cost of privately financing public projects can be 40% higher than relying solely upon government money, auditors found.

They also disclosed that the government has a £35m equity stake in one of Carillion’s major projects – public money that is now at risk. …

There are currently 716 operational private finance deals with a capital value of around £60bn, the report said.

Annual charges for these deals amounted to £10.3bn in 2016-17. Even if no new deals are entered into, future charges that continue until the 2040s amount to £199bn, it said – money that could finance the entire NHS for 20 months. …

“After 25 years of PFI, there is still little evidence that it delivers enough benefit to offset the additional costs of borrowing money privately,” she said. “Many local bodies are now shackled to inflexible PFI contracts that are exorbitantly expensive to change.

“I am concerned that [the] treasury has relaunched PFI under new branding, without doing anything about most of its underlying problems. We need more investment in our schools and hospitals but if we get the contracts wrong, taxpayers pay the price,” she said.

Research by auditors found that private investors who charge public bodies for insurance on each project, have not passed on 15 years of lower insurance costs.

“Public bodies are paying more for insurance than the actual cost, providing a gain to [private] investors,” it said. …”