Former Prime Minister Gordon Brown has stressed that “mass joblessness, homelessness and hopelessness are not inevitable” despite the catastrophic impact of the coronavirus pandemic on the UK economy. Writing in Big Issue magazine, the former Labour Prime Minister and Chancellor took aim at the Conservative Government’s stimulus measures following months of lockdown, which he said offered “nothing new” for the unemployed, self-employed and those receiving Universal Credit He wrote: “British families are now more fearful of the economic and employment impact of Covid-19 than they are of the virus itself.”
Chancellor Rishi Sunak announced a new Job Support Scheme at the end of September to replace the furlough system, which has supported businesses and staff who cannot operate fully during the pandemic.
However, Mr Brown said the new plans do nothing to address “much needed” investment in Britain’s infrastructure and could damage employment by making it “cheaper for an employer to employ just one full-time worker than it is to keep two part-timers“.
The former Prime Minister has without a doubt a lot of experience in dealing with economic crises, as he was in Number 10 during the 2008 financial crash.
However, unearthed reports reveal how under Mr Brown, the Private Finance Initiative (PFI) meant private contractors made huge profits while leaving the taxpayers footing incredibly hefty bills.
The PFI was a government procurement policy aimed at creating “public–private partnerships” (PPPs) where private firms are contracted to complete and manage public projects
It was initially launched in 1992 by Prime Minister John Major and presented as a means for increasing accountability and efficiency for public spending.
However, it was during Mr Brown’s decade-long stint as Chancellor of the Exchequer and then Prime Minister that it really took flight.
A 2011 report by The Telegraph reads: “Figures obtained by this newspaper through Freedom of Information requests reveal the full, mind-boggling cost of the Private Finance Initiative (PFI) upon which the [Labour] Government relied to fund its public sector infrastructure projects.
“More than 900 schemes have been completed with a total capital value of £56billion – yet the amount the taxpayer will have to repay currently stands at £229billion.
“That is the kind of interest rate a sink-estate loan shark would be proud of. In one particularly egregious example of how not to negotiate a contract, the Princess Royal University Hospital in Bromley in Kent cost the contractor £118 million to build but the final cost to the NHS will be £1.2billion.”
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By using private sector firms to build and manage public sector facilities, the report noted, it allowed Labour to proceed far more quickly with its hospital and school-building programme.
It continued: “It had the added attraction for the Chancellor of keeping vast amounts of state spending off the Government’s books. In theory, such a scheme makes sense – but only if the contracts are expertly negotiated and rigorously managed.
“Unfortunately, such disciplines are as rare as hens’ teeth in Whitehall.
“What we had instead was the economics of the mad house, with private companies pocketing enormous profits and leaving the taxpayer to spend the next half century paying off the bills.”
In an interview in September 2002, Mr Brown defended the PFI with the words: “I’ve got evidence that we are achieving value for money.”
However, in 2011, the Commons Public Accounts Committee reported that when considering new hospitals or housing, the Department of Health and the Department for Communities and Local Government were given no alternative to the PFI, regardless of value for money.
The Treasury, to its great discredit, appeared to be working hand in glove with contractors to drive deals through.
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Political journalist Fraser Nelson echoed the sentiment of the report in a 2008 piece for the Spectator.
He wrote: “It is a basic principle that most governments, even socialist ones, pay off debts in times of prosperity.
“Mr Brown’s innovation was to reject this tradition. Since Labour came to power, the national debt has risen 25 percent to £581 billion. During the second it took you to read that last sentence, it rose by £1,520 — and that’s by the government’s more optimistic measure.
“This figure does not include the layers of hidden debt, or the various IOUs made out in convoluted ways on behalf of the unsuspecting British taxpayer.
“Add up all the money pledged through PFI, and the independent Institute for Fiscal Studies believes that you will quickly reach the sum of £110 billion. “
In October 2018, the Chancellor, Philip Hammond, announced that the UK Government would no longer use the Private Finance Initiative. However, PFI projects will continue to operate for some time to come.