PFI

the private finance thing. could someone explain this in brief laymans terms for me please?

I think government paid private companies to fund state projects such as improving infrastructure.

So basically private companies were loaning the government money and taking in interest.

What is a 'Private Finance Initiative - PFI'
A private finance initiative (PFI) is a method of providing funds for major capital investments where private firms are contracted to complete and manage public projects. Under a private finance initiative, the private company, instead of the government, handles the up-front costs. The project is then leased to the public, and the government authority makes annual payments to the private company. These contracts are typically given to construction firms and can last 30 years or longer. In the United States, PFIs are called public-private partnerships.

http://www.investopedia.com/terms/p/...initiative.asp


The 717 PFI contracts currently under way across the UK are funding new schools, hospitals and other public facilities with a total capital value of £54.7bn, but the overall ultimate cost will reach £301bn by the time they have been paid off over the coming decades.

An example:

For example, while the capital cost of rebuilding Calderdale Royal Hospital in Yorkshire is £64.6m, the scheme will end up costing Calderdale and Huddersfield NHS Foundation Trust a total of £773.2m

What is really odd is that say a hospital uses PFi to fund its creation, they then pay the private company back. So if they can't make the repayments, they get closed down.

John Majors idea but Labour fluffed it and gave out contracts willy nilly.

thanks.

sounds like a bloody stupid idea to me

Now nearly all Scottish PFI schools are now owned, partially or fully, by foreign owners. So the money goes out of the economy aswell.