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Public private partnerships

I keep hearing bad things about privatisation of services such as health and education, and of things like the engineering work on the tube. I'm going to try and make an effort to record examples in this blog when I hear them.

The government has been keen on a kind of semi-privatisation through "private finance intiatives" (PFIs) and "public-private partnerships" (PPPs). For example, the land on which a hospital is built can be sold to a private company and then leased back. This raises instant cash for the hospital which can be invested in renovation and equipment. The stupid, stupid problem with this is that within about 8 years, the cash advance has been paid back in rent, and from that point onwards the rent becomes an extra overhead that saps money from the NHS. UCL's School of Public Policy have published some excellent work looking at issues like this in the NHS.

The BBC has gone through exactly this same process, selling off Broadcasting House (in July 2003) to a private company and leasing it back. The deal provides significant redevelopment work for the building, but nevertheless is short-sighted since again will end up costing more in the long term.

People seem to prefer buying rather than renting their own homes, so why is the reverse is happening in our public sector? There's no need to sell your land in order to get the builders in. This transfer of assets from the public to the private sector seems incredibly rash.

Last year I was on a course and met someone who was working for one of the companies involved in the London Underground engineering works. He told a group of us that his job was essentially to waste taxpayers' money by arguing with London Underground about whether or not a contract had been broken. For example, the contractor could fail to carry out certain work on time, and London Underground would want to claim compensation (for example) for the delay as agreed in the contract. The contractor would then take issue with minor contractual details, such as arguing that a particular security door had been left open at one point, contrary to LU's duty to maintain a safe and secure environment etc. - thereby avoiding the need for the company to stick to its contractual undertaking.

This morning, BBC News reports that the service to supply vital oxygen to patients in the UK has shown unacceptable delays, since it was transferred to a private company. One person in Cumbria has already died because of a lack of oxygen supply.

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