01 May 2010

Please can we restore the meaning of 'investment'?

One happy outcome of next Thursday's election is that we'll probably have a new government that can tell the difference between spending and investment. For the last thirteen years, our finances have been run by a man who deliberately perverted these terms to hide his extravagance. During this time, a large amount of real investment was unfunded by the taxpayer.  Many hospitals, schools and other facilities were built using Public Finance Initiative (PFI) funding, where instead of paying capital, the contracts allowed the developers to own the facilities and receive operating income at very attractive rates for decades to come.  Result: many projects that should have been capital investments (in the true sense of the word) have been turned into massive and inflated future spending (revenue) commitments.

The Tories flirted with Public-Private Partnership (PPP), an early version of PFI in the mid 1990s. They rapidly worked out that it was too dangerous. Brown grabbed it with both hands to run up another £500 billion of future debt while turning much of the normal capital investment into bribes for voters or jobs for the boys (and girls), especially in marginal and safe Labour seats. We will be paying for this man's lies, recklessness and dishonesty for the next thirty years.

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