Disgusted of Llandrindod Wells

A little advice for the Nats
13/07/2009, 9:39 am
Filed under: Uncategorized

Over at the Bevan Foundation’s new polished blog Welsh social housing’s chief rep, Nick Bennett, informs us of a new group to advise on public service reform and innovation. Being inventive with finance has gone out of fashion lately because financial instruments have been leaving egg on the faces of bankers (and a big hole in the public purse). Bennett says,

The rejection of PFI in Wales has been seen as a key part of the “clear red water” strategy of Welsh Labour, though there have been successful not for profit investment in both social housing and water (I declare an interest) – there is clear evidence that in devolved services capital investment has failed to benefit from private partnerships in the way that other parts of the UK have.

Translation – “It’s alright to get rid of PFI but you have to have something to replace it with.”  Let’s hope this group’s future findings will not be shunted into the sidings like so many other expert reports over the years.

PS  Nats wanting to win over left-leaning punters (which post-credit crunch means just about everyone) should cite the avoidance of PFI as an achievement of devolution. ‘Buy now, pay later’ in the public finances has definitely fallen out of favour in the past few months as voters realise the billions of quid they and their children will have to pay off. So, Wales isn’t shackled to such a big debt. This is a selling point. This also means investment is probably lower – but it’s not a bad start. We just need to find sustainable ways to fund the huge increases in spending required to get our services up to scratch. There’s a hell of a lot of (private) money sitting in accounts at the moment looking for a home. The Assembly Government is small enough to act quickly and needs to think of ways through Treasury rules to reliably parcel these funds out.


6 Comments so far
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But that isnt the issue though isnt it? The WAG is not allowed to borrow – which means that them finding another solution is very difficult.

Correct me if i am wrong of course…

Comment by Marcus Warner

You’re correct about the lack of borrowing potential in the conventional sense. But it could oversee the creation of something like a public services or infrastructure fund. It could provide some kind of guarantee too. For example, in Scotland infrastructural funding is delivered by the “Scottish Futures Trust. Services are a little different.

What I’m trying to say is that there are sustainable ways around rules, restrictions and constraints if we can be a bit imaginative and stretch our thinking beyond ‘private equals PFI equals evil’.

Comment by disgustedofllandrindodwells

Yes that may well be, but you posted a blog about how they need to find an alternative, without actually stating the crux of the issue.

Essentially Westminster has decreed that its ‘PFI or nothing’, that is not right.

The fact remains that the WAG cannot borrow, but a community council can.

Comment by Marcus Warner

Yes, well, despite the obvious intellectual case I don’t think reform to that glaring anomaly will come any time in the next couple of years. This is something WAG could do now.

Comment by disgustedofllandrindodwells

I am not sure I follow.

Aside from the fact I need to bone up on the Scottish link you left, my understanding is that regardless of being ‘innovative’ or ‘finding an alternative’, there is no alternative if you cannot borrow.

I accept your point on the here and now – but recently Dragon’s Eye covered a hospital in my area not being completed without one mention of the fact the WAG cannot borrow. It is very frustrating…

Comment by Marcus Warner

The alternative would be, for example, taking a chunk of the economic development budget and turning it into an infrastructure fund – or using the money to guarantee/underwrite other types of funding.

Another alternative – suggested by Geraint Talfan Davies in the Western Mail (and linked to here, thanks to the magic of google) – would be to aggregate the current local authority and public finances into a kind of trading bank to manage their funds and cash flows more efficiently. Even small savings in this area could free up extra funds for services in the local authority funding budget, which is almost £5bn.

Comment by disgustedofllandrindodwells

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