Meet the new PFI, same as the old PFI

Minor changes abound.

Despite George Osborne claiming in 2011 that the private finance initiative (PFI), Labour's model of funding infrastructure investments with private capital, was "discredited", the Financial Times is reporting that his attempt to find a "new delivery model" to replace the scheme has resulted in a "remodelled version" with "only minor changes" which include "stripping out services such as cleaning, catering and security from the 25 to 30-year contracts in a bid to keep a tighter control on costs."

Gill Plimmer, Jim Pickard and George Parker write that (£):

In a plan still being discussed with industry, the government is also considering investing a small amount of public capital into PFI projects. Although the amounts involved would be small, this would ensure the government a seat on the board of any project, raising corporate governance standards and easing fears that the schemes are in the hands of private financiers.

The main elements of the new PFI projects look set to remain the same. The private sector will still enter into long-term deals to design and build roads, hospitals and schools, with essential maintenance such as roofing included in the contracts. They will continue to be financed by private debt and equity paid for by a revenue stream from government rather than users. Schemes will in many cases continue to be off the public sector’s balance sheet.

The real question the government still hasn't answered is why a PFI replacement remains necessary at all. The scheme was, to all intents and purposes, an effort to keep borrowing off the books of the state. Rather than borrow the initial outlay and pay interest on it, the state would "rent" what was built with someone else's capital (often, of course, paying far more in the process).

These days there is little point in borrowing off the books. This year saw the lowest cost of borrowing for three centuries, and there is no way a private company can access capital for anywhere near that cost.

The political calculus is quite different, though. PFI allows the government to spend, without saying it's switched to plan B. And to Osborne, that's priceless.

Barts Hospital, one of the beneficiaries of PFI contracts, in 1752. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Benn vs McDonnell: how Brexit has exposed the fight over Labour's party machine

In the wake of Brexit, should Labour MPs listen more closely to voters, or their own party members?

Two Labour MPs on primetime TV. Two prominent politicians ruling themselves out of a Labour leadership contest. But that was as far as the similarity went.

Hilary Benn was speaking hours after he resigned - or was sacked - from the Shadow Cabinet. He described Jeremy Corbyn as a "good and decent man" but not a leader.

Framing his overnight removal as a matter of conscience, Benn told the BBC's Andrew Marr: "I no longer have confidence in him [Corbyn] and I think the right thing to do would be for him to take that decision."

In Benn's view, diehard leftie pin ups do not go down well in the real world, or on the ballot papers of middle England. 

But while Benn may be drawing on a New Labour truism, this in turn rests on the assumption that voters matter more than the party members when it comes to winning elections.

That assumption was contested moments later by Shadow Chancellor John McDonnell.

Dismissive of the personal appeal of Shadow Cabinet ministers - "we can replace them" - McDonnell's message was that Labour under Corbyn had rejuvenated its electoral machine.

Pointing to success in by-elections and the London mayoral election, McDonnell warned would-be rebels: "Who is sovereign in our party? The people who are soverign are the party members. 

"I'm saying respect the party members. And in that way we can hold together and win the next election."

Indeed, nearly a year on from Corbyn's surprise election to the Labour leadership, it is worth remembering he captured nearly 60% of the 400,000 votes cast. Momentum, the grassroots organisation formed in the wake of his success, now has more than 50 branches around the country.

Come the next election, it will be these grassroots members who will knock on doors, hand out leaflets and perhaps even threaten to deselect MPs.

The question for wavering Labour MPs will be whether what they trust more - their own connection with voters, or this potentially unbiddable party machine.