‘Institutionalised theft’: Barclays’ PFI contracts based on rigged interest rates ‘bleeding NHS & schools dry,’ say activists
Political activists gatecrashed Barclay’s AGM in Central London on Thursday to highlight the role of private finance initiatives (PFI) in “killing off” Britain’s public services, racking up unsustainable debt, dodging tax and funneling profits offshore.
Thursday’s demonstration marks the first of three planned days of protest to raise awareness about the impact of PFI projects on Britain’s schools and hospitals.
It was organized by The People vs PFI – a collective of grassroots organizations, students and NHS patients who are calling for Britain’s PFI contracts to be rendered null and void.
The campaign group argues the private finance initiatives are toxic for Britain’s public purse, and are operated by the private sector “for the private sector.” It warns overpriced PFI contracts, dependent on criminally rigged Libor rates, have burdened British tax payers with debts of up to £240 billion.
As this debt continues to mount, the campaign group says PFI schemes are facilitating the “institutionalized theft” of ordinary Britons.
Mounting debt
PFIs have been adopted in many states worldwide as part of a broader program of privatization and financialization. First introduced in Britain under ex-Conservative Prime Minister John Major in 1992, they were set up to use private capital to fund public infrastructure development.
However, concern is growing in Britain that these lucrative contracts enable service contractors, construction companies and offshore firms to profit as Britain’s schools and National Health Service (NHS) hospitals are collapsing under the weight of unsustainable debt.
Barclays’ stake in these PFI projects remains largely obscured from public knowledge, despite the fact the bank presides over 60 such contracts.
Nevertheless, the costly and clandestine nature of these deals has been denounced by campaigners, academics and MPs. In 2011, a Public Accounts Committee (PAC) inquiry into PFI contracts revealed the schemes were shrouded in secrecy.
As part of its probe, the Committee heard evidence from US investment bank Goldman Sachs on the likely cost of PFI for ordinary Britons in years to come. The bank told the PAC it was at least twice that of regular government borrowing, had increased significantly since the global financial crisis, and “will never come down.”
The PAC’s probe also uncovered Britain’s Treasury knew little about PFI investors’ tax arrangements.
The Treasury was unable to clarify whether PFI investors had paid tax in Britain on profits or equity gains – or whether Britain’s tax authorities had collected corporation taxes from PFI.
A call for accountability
Barclays boasted a 6.1 percent share of the Treasury’s PFI taskforce, according to The People vs PFI. The initiative was privatized by Labour in 1999/2000 and subsequently renamed Partnerships UK. The body subsequently offered advice to local councils on PFI deals after its founding.
The People vs PFI argue Partnerships UK was anything but independent, and acted in the interest of big business. It also warns of a conflict of interest, given the body was “51 percent owned and staffed” by banks that profit from PFI deals.
Through Partnerships UK, Barclays offered financial advice to local councils in Britain on prospective PFI deals. It also extended loans and “interest rate hedging products” to various PFI consortia, while manipulating the Libor interest rates upon which these contracts were based.
Campaigners representing The People vs PFI insist Barclays’ actions in this context were deliberate, self-serving and criminal. They argue Britons should not be liable for debts hinged upon fraudulently rigged Libor rates.
Professor of public health research and policy at Queen Mary University, Allyson Pollock, previously asked why Britain’s Serious Fraud Office (SFO) had not forensically scrutinized PFI contracts that were“signed on the basis of manipulated interest rates, causing the repayments to rise annually.” Pollock, a leading PFI expert in Britain, appeared confused at the time such measures had not occurred.
Barclays’ AGM began at 10am on Thursday, and continued throughout the day.
Throughout the course of the meeting, campaigners present challenged the bank on how much profit it made from Partnerships UK, how much tax it dodged on lucrative PFI projects and how many PFI contracts it presides over since the 2013 sale of its infrastructure wing to London-based venture capital firm 3i.
Barclay’s has also been criticized by UK campaigners for aggressive tax avoidance, with its now defunct Structured Capital Division being previously dubbed a “tax avoidance factory.” The tax dodging scheme met its final demise in 2013, as revelations regarding Barclays’ role in the Libor rigging scandal became apparent.
