PFI is looking more and more like an expensive mistake. How about this for an alternative?
Three facts that should be put together more often:
1. The Guardian reported yesterday that the taxpayer may have to pay up to £170billion for Private Finance Initiative schemes (PFI briefing here). Even a more moderate estimate of the cost still has Gordon Brown committing future governments to pay back £91billion by 2032 to banks, investors and private entrepreneurs.
2. In 1962 51% of total pension fund assets were invested in UK government bonds. In 1993 that figure was 7%. Today, it is just 3%.
3. The money in UK pension funds at present amounts to a capital stake of £750billion. The vast majority – over 70% – of that money is invested in shares issued by private companies.
How about this for an alternative to PFI? Link pension funds to local authorities, NHS Trusts, education authorities and the like. Let these bodies raise the money needed for infrastructure projects by effectively borrowing pension money off people. Let people with pensions choose the type of services they want in the area of their choice. Run the whole thing democratically on a mutual, not for profit basis.
This wouldn’t just sort out the PFI debacle. It wouldn’t just ameliorate the looming pensions crisis. It would square the most important circle in contemporary political life: the cavernous divide between people’s aspirations and what they do about them on a local level.
They even had a catchy name for them.
People’s Pensions. Not bad, eh?