PFI companies ‘should pay windfall tax’

21 Feb 18

Unison has called for private finance initiative companies to pay a ‘windfall’ tax to help pay for the UK’s public services. 

PFI companies “just keep on hitting the jackpot” as corporation tax has gone down from 30% in 2008-09 to 19% this year, the trade union’s general secretary Dave Prentis has argued.

Many PFI deals were signed by the Treasury ten years ago before the rate reduction, he explained, meaning they were making more profit than they expected.

“There’s no time to lose,” Prentis said, making the call on Monday

“Crippling PFI debts are pushing local services to the brink and costing taxpayers dear.”

“It’s time for a windfall tax on the companies cashing in at our expense.”

Separately, the think-tank Centre for Health and the Public Interest in analysis released on Tuesday said private companies working on schools PFI schemes in England had made £329m profit from public money in 2010-2016.

It also calculated £270m of public money would go to schools PFI companies’ profits between 2017 and 2020.

 “The impact of these payments to PFI companies on the finances of local authorities is problematic,” the CHPI report stated.

“Because at a time of austerity and where both schools and local authorities have been subject to significant reductions in funding from central government, the payments to PFI companies (and subsequently their profits) are ring-fenced and since protected”.

Out of 172 education PFI schemes 115 were signed before corporation tax rates dropped from 30% in 2008-09 and a further 42 were signed before they dropped again to 26% in 20011-12, the think-tank said.

“Allowing PFI companies to offset their interest payments against profits is government policy; the current corporation tax take for PFI companies would be substantially higher if this policy was reversed,” the CHPI paper found.

Meanwhile, Prentis suggested local councils that entered into PFI deals are still subject to “eye-wateringly high PFI payments”.

He claimed this is “threatening to overwhelm already cash-strapped public services”.

“Local communities may now have shiny new schools and hospitals but at huge cost,” he explained.  

Unison believe that the tax could be implemented if two amendments to the Finance Bill, put forward by Labour MP Stella Creasy, receive backing in the House of Commons debate on the draft legislation, due to take place today. 

National Audit Office figures show that there are roughly 700 PFI projects in operation across the UK, involving schools, hospitals and prisons.

The Treasury has been contacted for a response.

A PF analysis of PFI found there were benefits to the model and it could still have a future.

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