Peter Hoskin

Brown’s PFI dilemma

Brown's PFI dilemma
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Good work by the Times, who are tracking the Government's continuing problems on the PFI front.  If you remember, numerous PFI projects are in danger of collapsing as the banks withdraw funding, and word was that Brown 'n' Darling would have to stump up £4 billion of taxpayers' cash to fill the breach.  I'd assumed that would mean the Government hawking more gilts and adding to our national debt, which has all sorts of implications for the off balance-sheet nature of these schemes.  Turns out the Treasury may have something different in mind:

"Billions of pounds could be taken from council staff pension schemes to bail out the Government’s PFI school projects, The Times has learnt.

Partnership for Schools, the government body responsible for the £55 billion building programme, has approached several local authorities to ask for emergency cash from pension funds because private finance has dried up.

The funds, worth £100 billion, cover final-salary pensions for two million council staff including social workers, cleaners, refuse collectors, lollipop ladies and town hall officials. Unlike other public sector schemes, they are made up of contributions from staff and employers."

It's striking that the Government's toying with what are such politically toxic solutions.  Why risk a bunch of "Public sector pension raid" headlines when ramping up debt, through the usual processes, has hardly bothered the Government before?  I suspect it's to do with keeping the PFI projects off the books - which could itself be a sign that the Government's getting worried about how bad the numbers are looking.