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Stella Creasy: Labour can't wait for government to act on PFI. We need a windfall tax now

PFI is the equivalent of taking out a payday loan to pay for building and running our public services.

Aneurin Bevan argued that the language of priorities was the religion of socialism. How Labour approaches Private Finance Initiative contracts is a real test of faith in what being left-wing means. Across the country schools and hospitals are saddled with debts they cannot reduce to pay for buildings and services they can no longer afford. Those headteachers planning redundancies or hospitals cutting operations to make budgets add up need more than to be told to wait until there’s a Labour Government. Today’s vote on whether to apply a windfall tax on the profits PFI companies gives us a chance to show whether our commitment to tackling predatory capitalism is fact or fiction.

Although introduced by John Major, PFI is synonymous with New Labour. It embodied the third way, bringing private cash to cover the cost of building public institutions. It seemed a win-win - Governments got to keep borrowing off the books, and private companies charged excessive rates of interest for taking on the risks of building and running schools and hospitals. With £200bn due back to these companies over the coming years for £60bn worth of buildings, PFI is the equivalent of taking out a payday loan to pay for building and running our public services. Last year the annual payments alone amounted to £10.3bn - with around half of this being for interest repayments and charges by these companies rather than for services. 

The National Audit Office calculate it is on average 40% more expensive than public borrowing. The problem isn’t the higher costs but the intransigence of the companies involved too. Northamptonshire Council is effectively bankrupt, but will still have to foot an eyewatering and irreducible bill of £270million over the next two to five years alone, of which £77m is interest payments. The Centre for Health and the Public Interest has highlighted that nearly a quarter of the additional funding the Government has promised for health and education will go direct to these companies in profits. Carillion’s collapse and uncertainty about Interserve shows that the belief working with the private sector would transfer the risks of building such projects to them is also flawed. 

With PFI, the devil is very much in the detail. Four hundred pages long, the standard contracts explicitly demand full cost recovery for the financiers if deals are cancelled. On top of this, the National Audit Office has also documented how the Government would be required to cover the costs of the interest rate swaps used to prop up their profitability. Human rights contract law is on the side of these companies in ensuring they would be compensated should anyone seek to nationalise them. Potentially billions would have to be paid to the eight or nine financing companies who account for most of this industry- vital funds sucked out of our already cashstrapped public sector for their shareholders not service users.

But whilst the deals are watertight, taxes are one area where there is room for manoeuvre. When these contracts were signed, the level of tax companies would pay formed a key part of the value for money assessment. Many were agreed at a time of 30% corporation tax. Under the Tories this will fall to 17% by 2020. Within the NHS alone they have already made a windfall of £190m savings in their tax bills from these changes - in our education system they stand to get an unexpected bonus of £60m extra by 2020 in reduced tax liabilities. 

Asking individual hospitals and schools to renegotiate these contracts on their own is prohibitively expensive and yields limited savings. If the Government stepped in to deal with the small number of companies involved across the portfolios of loans they hold this could generate substantial savings. Critically, using the threat of a windfall tax to get them to the table puts in sight a solution – and cashback - within a matter of months, not years. Longer term, enabling local councils and trusts to issue bonds, opening up a sovereign wealth fund for infrastructure investment and supporting more competition for the business of the public sector would all break the stranglehold these companies have had for so long on the costs of public sector borrowing. 

By voting for a windfall tax today, MPs have a chance to show if the Government is too afraid to negotiate, then Parliament will act to recoup taxpayers’ losses. It cannot happen a moment too soon. Claiming we can tear up contracts may sound great to the faithful in political party meetings, but to tackle the hell these services are living with there’s an urgent and pressing need to focus on how to get cashback for our public services now. Those working in PFI-run schools and hospitals need and deserve nothing less.

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Michael Carrick is the “Geordie Pirlo” that England misunderstood

The Manchester United legend’s retirement announcement should leave Three Lions fans wondering what if?

That it came in the months leading up to a World Cup arguably added an exclamation point to the announcement of Michael Carrick’s impending retirement. The Manchester United midfielder, who is expected to take up a coaching role with the club afterwards, will hang up his boots at the end of the season. And United boss Jose Mourinho’s keenness to keep Carrick at Old Trafford in some capacity only serves to emphasise how highly he rates the 36-year-old.

But Carrick’s curtain call in May will be caveated by one striking anomaly on an otherwise imperious CV: his international career. Although at club level Carrick has excelled – winning every top tier honour a player based in England possibly can – he looks set to retire with just 34 caps for his country, and just one of those was earned at a major tournament.

This, in part, is down to the quality of competition he has faced. Indeed, much of the conversation around England’s midfield in the early to mid-noughties centred on finding a system that could accommodate both box-to-box dynamos Steven Gerrard and Frank Lampard.

As time went on, however, focus shifted towards trequartistas, advanced playmakers and those with more mobile, harrying playing styles. And the likes of Jack Wilshere, Ross Barkley, Jordan Henderson and Dele Alli were brought into the frame more frequently than Carrick, whose deep-lying capabilities were not utilised to their full potential. That nearly 65 per cent of Carrick’s England caps have come in friendlies shows how undervalued he was. 

In fairness, Carrick does not embody similar characteristics to many of his England midfield contemporaries, including a laudable lack of ego. He is not blessed with lung-busting pace, nor is he enough of a ball-winner to shield a back four solo. Yet his passing and distribution satisfy world-class criteria, with a range only matched, as far as England internationals go, by his former United team-mate Paul Scholes, who was also misused when playing for his country.

Rather, the player Carrick resembles most isn’t English at all; it’s Andrea Pirlo, minus the free-kicks. When comparisons between the mild-mannered Geordie and Italian football’s coolest customer first emerged, they were dismissed in some quarters as hyperbole. Yet watching Carrick confirm his retirement plans this week, perfectly bearded and reflecting on a trophy-laden 12-year spell at one of world football’s grandest institutions, the parallels have become harder to deny.

Michael Carrick at a press event ahead of Manchester United's Champions League game this week. Photo: Getty.

Where other players would have been shown the door much sooner, both Pirlo and Carrick’s efficient style of play – built on patience, possession and precision – gifted them twilights as impressive as many others’ peaks. That at 36, Carrick is still playing for a team in the top two of the top division in English football, rather than in lower-league or moneyed foreign obscurity, speaks volumes. At the same age, Pirlo started for Juventus in the Champions League final of 2015.

It is ill health, not a decline in ability, which is finally bringing Carrick’s career to a close. After saying he “felt strange” during the second-half of United’s 4-1 win over Burton Albion earlier this season, he had a cardiac ablation procedure to treat an irregular heart rhythm. He has since been limited to just three more appearances this term, of which United won two. 

And just how key to United’s success Carrick has been since his £18m signing from Tottenham in 2006 cannot be overstated. He was United’s sole signing that summer, yielding only modest excitement, and there were some Red Devils fans displeased with then manager Sir Alex Ferguson’s decision to assign Carrick the number 16 jersey previously worn by departed captain Roy Keane. Less than a year later, though, United won their first league title in four years. The following season, United won the league and Champions League double, with Carrick playing 49 times across all competitions.

Failing to regularly deploy Carrick in his favoured role – one that is nominally defensive in its position at the base of midfield, but also creative in providing through-balls to the players ahead – must be considered one of the most criminal oversights of successive England managers’ tenures. Unfortunately, Carrick’s heart condition means that current boss Gareth Southgate is unlikely to be able to make amends this summer.

By pressing space, rather than players, Carrick compensates for his lack of speed by marking passing channels and intercepting. He is forever watching the game around him and his unwillingness to commit passes prematurely and lose possession is as valuable an asset as when he does spot an opening.

Ultimately, while Carrick can have few regrets about his illustrious career, England fans and management alike can have plenty. Via West Ham, Spurs and United, the Wallsend-born émigré has earned his billing as one of the most gifted midfielders of his generation, but he’d never let on.

Rohan Banerjee is a Special Projects Writer at the New Statesman. He co-hosts the No Country For Brown Men podcast.