Radical reform of PFIs – John Gelmini

Privatised asset

Privatised asset (Photo credit: Danny McL)

Earlier today, I re-blogged an interesting article in the FT entitled ‘Discredited’ PFI escapes with a makeover – FT.com, and after adding my two cents, I invited wider views.

I received a comprehensive and strong response from John Gelmini which I am re-blogging below.

Whilst, I broadly endorse John Gelmini’s response, I do not necessarily blame Andersen Consulting, now Accenture, for this misguided decisions from politicians, bureaucrats in HM Treasury or the wider Public Sector. For me, it also raises a much bigger issue of public accountability, namely the relationship and oversight of politicians, the Public Sector and the major management consulting firms. For further insights into my views, I would recommend a read of a blog which I wrote last year entitled:

UK Local Authorities and Shared Services: Cost-Cutting – Myth or Reality?

The earlier blog highlights how management consultants’ financial models are widely deployed out of context, blurring assumptions, risk management, governance and accountability.

Anyway, please feel free to share your views whether they are related to:

  • Radical reform of PFIs
  • Oversight of Government and Management Consulting, and
  • Effective cost reduction in the Public Sector

—————————————————————————————————————————————————– Andersen Consulting, now Accenture devised the original formulas which were used to determine whether or not PFI deals made good value for money for taxpayers.

The formulas allowed for cost overruns of up to 38 times what given costs would normally have been, which is one of the reasons so many PFI hospitals are in trouble, along with the NHS Trust areas they reside in.

The satirical magazine Private Eye and the left-wing journalist, the late Paul Foot, campaigned tirelessly and for decades against the widespread waste, fraud and criminality that accompanied many of these PFI deals which we as taxpayers are still saddled with to this day.

Whatever “making over” has been done, it is not a substitute for a new transparent value for money PFI formula and a police investigation of all those who have benefitted financially from the worst PFI deals. Such an investigation needs to be thorough and wide ranging and include all the Civil Servants who were involved whether alive or dead. All monies should be recovered where malfeasance is discovered and proven and in the case of deceased PFI directors and Civil Servants engaged in proven malfeasance and criminality, the estates and living trusts they left behind should be sequestered to repay taxpayers.

Trust CEOs, County Council Chief Executives, heads of Schools, Childrens’ and Families Directorates’ who allowed their customers and council taxpayers to be fleeced in this way should be dismissed for industrial misconduct and breach of fiduciary duty and personally surcharged to the same extent as a Lloyds “Name”. They should be barred from holding a similar role, even in an interim capacity, for life.

Privatization was and is an excellent idea and I do not mean to suggest that it should not be used along with PFI initiatives to get much needed infrastructure built now.

However, whilst PFI contractors and outsourcers are fully entitled to make healthy profits, there has to be a test of reasonableness and value for money for taxpayers, applied rigorously and transparently to each deal.

Secondly, no deal should be for more than 30 years because to exceed this is to bind future generations and mortgage the futures of people who have not yet been born.

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Why UK Chancellor George Osborne will not be allowed to use the axe on the Public Sector – John Gelmini

George Osborne visits  Thessaly Community Project

George Osborne visits Thessaly Community Project (Photo credit: conservativeparty)

Earlier today, I re-blogged  an excellent article from Benedict Brogan, the Deputy Editor at the Telegraph entitled:

Osborne is sharpening his axe – but will Cameron let him use it? – Telegraph Blogs

I added my two cents worth of comment and received a comprehensive response from John Gelmini which I am re-blogging below. Whilst, I do not necessarily agree with all of John Gelmini’s arguments, I endorse the broad thrust and direction of his argument. Do you have an opinion that you would like to share?


Whatever cuts George Osborne makes will be too little too late and all because of Cameron and Clegg’s cowardice and the complacency of a Cabinet of largely intellectual lightweights unable and unwilling to act with the speed, decisiveness and ruthlessness to get the job done.

The evidence is that George Osborne will not be allowed to force County Council, Police and Fire Command mergers with suitable de-layering and the sacking of 50% of Local Authority workers who are not needed and never were.

He will do nothing significant to reduce the number of unnecessary Civil Servants, nothing to curb Royal expenditure and the Civil List, and he will do nothing to stop the waste of Afghanistan, the maintenance of a naval task force off the coast of Iran, the use of Special Forces in Syria, and the disgrace of the overseas aid budget overseen until recently by “know your (blank) place”, Andrew Mitchell, a thoroughly useless and unnecessary Minister, even before his recent outburst.

He will impose benefit cuts which the public approve of but will like a lot less when they are applied to them and he will do nothing to create jobs and growth on the scale required.

The new bank will not be up and running until mid 2014 and with just £10 billion of lending capacity it will be too little too late.

Variable taxes on food to reduce the obesity crisis and the costs of the NHS which are out of control will also not apply and the MOD will carry on wasting money along with the Home Office which is failing to control immigration.

Worse than that, because David Cameron has insulted the Chinese publicly so many times, we will not get their Sovereign Wealth Funds building needed infrastructure, so building workers will remain on the dole and blue-collar unemployment will remain higher than it needs to be even after cuts.

Frankly, we would do better outsourcing the entire Government to the Swiss or the Singaporeans, both of whom would do a far better job than this sorry collection of lame ducks, idle Civil Servants, establishment, “has-beens” and public school educated Ministers lacking in drive, any sense of urgency, or commonsense.

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