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Friday, 20 February 2009

Putting the pffffffffffftttt in PFI

An article in The Times says that the government can't find banks to fund
its PFI projects for schools. The £55 billion building programme has raised a
£300 million loan from the EIB, but they would like a little more because
that doesn't cover their needs. At the moment they are in a bit of a hole to
the tune of £10 billion. So now Partnership for Schools, the government
body responsible has decided that the best partners for their programme are
teachers and retired teachers who are sitting on a pension pot of £100
billion along with all the social workers, cleaners, refuse collectors,
lollipop ladies and town clerks in the local government wing of the private

When you take into account all of the loans to PFI projects that have come
from banks that are now owned by the government and are thereby on the
governments books, and the fact that the equity in these projects will now
ne coming from state pensions funds, PFI seems to have been a waste of time.

When the IAS and OECD gets the government to account for these things
correctly they show the assets and liabilities in these projects twice, once
as contractual liabilities with the PFI SPV, and again as loans from state
owned banks with the matching funding.

1 comment:

Demetrius said...

Ooops!!! The Teachers Pension Scheme is NOT a local government scheme. It is wholly separate and central government operated now through an agency. In any case there is no "Pot" of investment funds. It has been operated on the "running bath" principle,where those in work pay in, and these payments should cover (and at one timne did) the pensions to those who are retired. The trouble now is that the amount going in is well short of the amount going out, hence it actually requires government borrowing to fund. The contributions have been upped in recent years, but teachers pension liabilities remain a major part of the central government deficit