On 14 May, 16:28, James Farrar wrote:
I opposed PFI at the time, but have actually come round to supporting
it - the underdelivery has only been about equal to that seen under
public sector schemes, and the government has been effectively forced
into continuing to fund LU at a constant amount for the length of the
contract (whereas previously it used to wildly vary LU's budget year-
to-year and hence bugger up its investment and replacement plans).

The objection to PFI is that it is an incredibly inefficient way of
funding major capital projects. The government can borrow money more
cheaply than private companies - but Brown doesn't want all that
borrowing on his balance sheet, so off it goes to private companies at
higher interest rates.

I know that's the objection; that's why I opposed PFI when the plans
were being drawn up.

However, having since read much more about the history of LUL, and in
particular the massive inefficiencies that were brought about by
politicians inflicting unexpected year-on-year changes in the capex
budget (and hence cancellation of planned schemes and no ability to
fully commit to any project with a greater-than-12-month timeline), I
think a couple of extra % on financing costs to guarantee a steady
income - with punitive penalties should government try and cut
spending - is a price worth paying.

--
John Band
john at johnband dot org
www.johnband.org