Matthew Taylor – 2001 Speech to Liberal Democrat Party Conference

Below is the text of the speech made by Matthew Taylor to the Liberal Democrat Party Conference held in Bournemouth on 25 September 2001.

Before the appalling events in America, the row between the Prime Minister and the TUC (and many Labour backbenchers) over the Private Finance Initiative looked set to dominate the news.

Introduced by the Conservatives, PFI has been pursued by Labour in their “private is best” footsteps.

Liberal Democrats oppose this dogma – but not as members of the old-left’s “public is always best” camp either.

In theory, private involvement can, sometimes, encourage lower costs and better service, and real innovation.

For example, a company building a road can be paid for each day it is available. Therefore the designs minimise maintenance, meaning fewer traffic jams for you and me.

Similarly, in some PFI prisons bonuses are paid if re-offending rates fall – an incentive to concentrate on helping prisoners go straight.

Of course, some want private involvement ruled out altogether.

They claim the cost of borrowing is higher for the private sector than for government, and so it is always more expensive.

But the government is paying a little more to, in effect, insure against the risk of something going horribly wrong. Then it’s private companies, not you and me as taxpayers, who get landed with unexpected costs and overruns.

In any case, other savings may, may outweigh the interest costs.

Critics also mention that government is often tied into PFI contracts for 25 or 30 years.

However when government borrows for a conventional project it is also tied into contracts of 25 or 30 years – albeit for the repayment of debt rather than the provision of a service.

Either way, if the original service provided turns out to be mistaken, the taxpayer will still be paying for that mistake many years later.

In truth, neither private finance nor public service can rescue the taxpayer from bad decisions in the first place by the politicians.

But if the opponents sometimes exaggerate their case, the zealots in favour go further. Much further.

Both Conservative and Labour Politicians have suggested PFI magics up “extra” public investment.

But PFI is a form of debt just like government borrowing. It incurs charges for the service built, rather than interest on the money borrowed to build it.

Either way, the taxpayer pays.

Even if it doesn’t show in the Treasury accounts that way.

In truth, it only makes the Government’s figures look better – it doesn’t save taxpayers a penny.

Extraordinarily, the Treasury openly admit that they are willing to pay for more expensive forms of finance just to keep the cost out of the official statistics – a pure waste of public money.

When they did this for the Channel Tunnel Rail Link it cost us £80m extra – to make the Chancellor look prudent.

For the London Underground it will cost £700m extra for Gordon’s Brown’s obsession with appearing – just appearing – prudent.

That’s a shocking scandal. It’s one reason why we will put a stop to London Underground’s part-privatisation if we can.

Because of this, the Government usually refuses to publish their public sector cost comparisons with PFI.

For the NHS these show an average benefit of just 1% – which usually depends on unproven assumptions of long-term efficiency savings.

Claims of commercial secrecy are sometimes used to justify this cover-up.

Only because the Government was forced by a court to publish the Deloitte & Touche report, could we prove that the London Underground PPP calculations had been rigged, and that the bond scheme is clearly cheaper.

It is a shocking scandal. And we will put a stop to it.

Worse still, government Departments often get their sums wrong.

I can announce today that we have now examined all the National Audit Office’s reports on such schemes.

More than half show major errors in the calculation of costs – all favouring PFI.

At the very least this is gross incompetence.

Frankly, we believe the figures are being fiddled.

If it was cricket Gordon Brown would get a life ban.

We will put a stop to it.

So no surprise, there are problems with accountability.

Most PFI contracts replace unaccountable and over-centralised publicly run services with even more unaccountable and over-centralised privately run services.

Democratic accountability is actually diminished, particularly if information is treated as “commercial – in confidence”.

So it is time to sweep away this secrecy.

To expose private involvement in public services to proper scrutiny.

To knock it off its pedestal

To allow real choice. Examine every option.

Throw out the ideology.

This motion rightly doesn’t say it is always wrong.

It can, at the right time, in the right place, bring real benefits.

But rigging the system at the expense of democratic accountability, value for money or quality of service is wrong.

Totally wrong.

We won’t rule out using the private sector. To do so would be for us to say that even if a project could be proven to substantially improve public services then we would not use it.

But we do demand proof.

Scrutiny.

Accountability.

When public services are developed, all the options must be tested.

With the Liberal Democrats they will be tested.

So a word on the main amendment:

It implies that even when a partnership can be unequivocally demonstrated to be better, by our tests, we should not use it in the NHS.

That doesn’t make sense. If we believe these tests are right, we should have the self-confidence to use them. If NHS schemes don’t match up we’ll put a stop to them.

On the evidence.

But, by testing alternative provisions, the public sector is itself opened up to scrutiny of its costs, its quality of service, and its ability to innovate.

Liberal Democrats in local authorities and the devolved administrations have often delivered greater accountability and transparency in PFI projects.

The challenge now is to ensure that all public private partnerships are tested in this way.

Freeing local authorities and devolved administrations to borrow on financial markets, subject to the same rules as central government, would further level the playing field between PFI schemes and other alternatives.

Labour have wedded themselves to PFI, whatever the cost.

The Conservatives can offer no opposition to this, only support.

They invented it.

So it falls, yet again, to Liberal Democrats to lead the only effective opposition.

Let us be absolutely clear today.

Liberal Democrats are not ideological about private finance or public service.

But we are implacably opposed, ideologically opposed, to secrecy, dogmatism or fixing.

We will root it out every time.

We will put a stop to it.

Throwing out the ideology. Putting people first.

Now that’s effective opposition!