14 January 2000
In a one-and-three-quarter hour savaging of PFI, senior academics scorned claims that the initiative was a panacea for the shortfall in public sector capital spending. They urged New Labour to consider alternative ways of financing major projects such as the London Underground and new NHS hospitals.
Stephen Glaister, professor of transport and infrastructure at Imperial College and a long-time supporter of a revenue bond for the London Underground, claimed the government's plans for a public-private partnership could be an obstacle to what the government wants to achieve.
He said it could not take account of how London would develop over the lifespan of a 30-year contract, whereas a bond raised from revenues could be more flexible. 'The advantage of the bond is that you support the raising of the finance from the work,' he said. 'There is a system of capital planning. Bonds would save London people a great deal of money.'
Glaister calculated that if two-thirds of London Underground's £300m annual profit were invested in a bond with 5.75% interest, it would immediately raise £3bn.
Tony Travers, director of the London School of Economics' Greater London Group, said using a PPP would be a step into the unknown, whereas the regeneration of New York's subway system provided a real-life example.
'The point about the New York situation is that it is regenerating a subway system highly analogous to the London system,' he said. 'This is something real that exists in the real world. The PPP may or may not be a good thing but that is a hypothesis.'
A bond in the capital would also establish a model that other British cities could follow, added Travers.
Rosemary Scanlon, a research fellow with the LSE and a former New York State official, said bonds had raised $22bn for the New York subway and had become accepted by the business community.
The attack on PFI was not confined to transport as Professor Allyson Pollock, head of the health policy and health services research unit at University College London, said PFI had proved a 'very expensive learning curve' for the NHS. PFI would lead to a reduction in bed numbers which, she said, was 'particularly poignant' at this time of year.
But committee chairman Giles Radice countered that PFI had produced noticeable benefits to some of his constituents in the north east through the building of a new hospital in Durham.