PFIs are quite simply the worst mortgages in the world. PFIs are a massive rip off. At a time when frontline services are buckling under the strain of government cuts, PFIs are siphoning off precious resources.
- Frances O'Grady, General Secretary of the Trades Union Congress.
Picture by Kate Teal-Spicer
In 2012, Sheffield City Council (SCC) signed a confidential 25-year Private Finance Initiative (PFI) contract called âStreets Aheadâ. The deal was signed with three companies - 1) Amey Plc, owned by the huge Spanish multinational corporation Ferrovial and its two partners: 2) some investors based in the offshore tax haven of Guernsey and huddled under the name, the Tetragon Financial Group, 3) a shadowy firm that has changed its name at least three times since then and which is now called PIP Infrastructure Investments (No 5) Limited. (For details, see âAbandon Ameyâ under the âDownloadsâ tab on this website.)
What PFI contracts do is let private, profit-making companies take over, control and manage buildings and services usually operated by local councils, the NHS or Westminster. In Sheffield, âStreets Aheadâ essentially meant âStreets Privatisedâ.
In exchange for payments that are equivalent of Â£1.75 million every week over the 25 years until 2037, contractor Amey agreed to fix the roads in Sheffield, clear away dead leaves, grit icy roads, and generally take care of our city after decades of under-spending. Amey also agreed to maintain our healthy street trees under what is known as a âwhole servicesâ contract. .
In the past six years, we have learned why, as Francis OâGrady says, âPFIs are quite simply the worst mortgages in the world.â
This conclusion became even more valid on 3 December 2018 when The Financial Times revealed that Ferrovial planned wanted to sell Amey plc, a company in which it owns a 100% interest.
So whatâs so bad about Private Finance Initiative schemes? Among a long list of reasons:
1) local communities and cities, such as Sheffield, lose almost all control over the provision of many local services;
2) PFIâs are extremely expensive. At a school in Bristol, a single blind for a room will end costing Â£8,154 under PFI.
3) PFI deals tie local communities into long-term â and again EXPENSIVE â contracts. (Usually such contracts last 25-30 years.) In Liverpool, for example, the council has been paying Â£12,000-a-day for a school that has been closed since 2014. And it will have to keep on paying for decades.
4) The quality of the services provided under a PFI deal is often very poor. (For hundreds of examples in Sheffield under âStreets Aheadâ, check out the âIncidentsâ tab on this website.)
5) Public sectors jobs are outsourced.
6) The finances of a city --- and its financial future --- become mired in the web of international capital, get-rich-quick investors and tax havens. In Sheffield, we will be paying for âStreets Aheadâ until 2055. (To start to understand how PFIs operate, watch the three brief videos here under the âVideosâ tab.)
Is it any wonder then that most political parties, first The Greens, then Labour and recently the Tories, are against PFIs?
To quote a Sheffield tree campaigner, âtaking out a PFI for 25 years is a bit like taking out a loan with Tony Soprano.â
âAMEY OUTâ is a new Sheffield-based campaigning group. We are non-partisan. Our aim is to get Amey out of Sheffield, to wind up this hugely expensive 25-year PFI deal and bring an end to the destruction and conflict it has brought to our city.
Amey will keep doing the same thing until 2037 if Sheffield residents donât take action.