Just when I thought the authorities couldn't possibly find any more problems with public private partnerships (P3s) in Britain, another revelation comes along. This time from the Public Accounts Committee of the House of Commons. Here's the Guardian's account of the latest P3 (or, as the Brits call it, "PFI") scandal, Investors 'using tax havens to cash in on PFI contracts':
City investors have made bumper profits from taxpayers by buying up the contracts for schools and hospitals funded through the private finance initiative and taking the proceeds offshore, the public accounts committee warned on Thursday. "They're milking the PFI system for profit," Margaret Hodge, the Labour MP who chairs the committee, told the Guardian, accusing Treasury officials of being "dreadfully complacent" about tackling the issue.
... in a highly critical report, the cross-party committee says the PFI became "the only game in town" after 1997, and Whitehall officials failed to ensure the taxpayer was getting value for money. In particular, the committee criticises the Treasury for assuming PFI contractors would pay tax, when many are based in offshore tax havens.
Stella Creasy, a Labour MP on the committee who has tabled a series of parliamentary questions about the taxation of PFI firms, said: "There is tax out there that the British taxpayer is owed and the Treasury is doing nothing to get it back." She warned that the Treasury was still banking on receiving tax revenues from the 61 projects in the pipeline.
Dave Prentis, general secretary of the public sector union Unison, said: "It is a disgrace that many of the PFI investors are registered offshore for tax purposes. They are literally ripping the taxpayer off twice, and making huge profits in the process. It is time to ditch PFI once and for all."
Some of the 700-plus projects have changed hands several times since their inception, often making healthy gains for the original contractors. The accounts committee said: "We suspect that initial investors are able to make excessive profits from selling PFI shares, yet we lack the information to know for sure."
The committee calls for the controversial scheme to be brought within the scope of the Freedom of Information Act, so that the public can judge whether they are getting value for money and contractors can no longer hide behind commercial confidentiality....
In the appendix to the report, the PAC identifies 91 PFI projects held in overseas tax havens, including 33 owned by HSBC Infrastructure, an offshoot of the high- street bank, based in Guernsey. (My emphasis throughout - Doug)Innisfree, one of the largest investors in PFI, told the committee that 72% of its shares were held by investors based in Guernsey. With a 30% share, Innisfree is part of the consortium that won a massive P3 hospital bid in Montreal. (I expect to hear more from them.)
How much profit these corporations are protecting from taxation is unknown as "commercial confidentiality" protects this, along with much else. Despite all the problems, Ontario continues to march in Britain's P3 footsteps, with plans for many more P3 hospitals. Here's the Guardian cartoon: