April 09, 2009

'A toxic combination of ideology and terror'

George Monbiot on the bizarre PFI scheme to widen the M25:

    If the government underwrites the scheme, the greater part of the risk will fall on taxpayers, negating the entire rationale of PFI. But, citing higher lending risks during the recession, the banks backing PFI infrastructure projects have increased their margins, in some cases by 500%. The government will lend or promise to lend cheap money to the banks, which will then charge us, through the consortium, stonking rates of interest for the use of our own cash.

    Weird enough for you yet? Well, one of the banks reported to be backing the scheme is RBS. The taxpayer now owns 58% of it. This is likely to rise soon to 95%. If the government underwrites the M25 expansion, it will in effect be bailing out RBS twice, then charging itself for the privilege - and for the bankers' fees, including salaries and bonuses. RBS - in other words, you and me - already has 10bn invested in PFI schemes in this country, for which we are paying extravagant rates. If you have come across a state-spending scheme madder than this, please let me know.

Why does this happen? Capitalist realism of course.

    So why doesn't the government just cut out the middleman and fund the project - or a much cheaper version of the project - itself? The old explanation - that PFI allowed it, like Enron, to keep its public liabilities off balance sheet - no longer holds. The government has bowed to the demands of accountants and auditors: from this month onwards, PFI schemes will be counted as public sector debt.

    This is something quite different: a toxic combination of ideology and terror. No lesson, however brutal, can divert the government from its central project of propitiating its old adversaries: industrialists and the rightwing press. Gordon Brown will keep feeding the beast, however much this costs. True disciple, he worships still at the altar of market fundamentalism, even when the market no longer exists.

Posted by mark at April 9, 2009 08:55 AM | TrackBack