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July 21, 2007

Union Leader Speaks Out!

PFI schemes are indeed very like a mortgage:

Taking on costs in the form of a mortgage are increasingly hard to justify in a health service that is seeking to move care out of hospitals and into the community.

What does our union brainbox have to say about it?

Andy Belfield, of the union Unison, said: “PFI projects are like buying your house on credit card, a waste of money.”

Err, no, umm, they're not. They are, as noted, like buying your house on a mortgage: you know, that financial product specifically designed to enable you to buy a house?

July 21, 2007 in Your Tax Money at Work | Permalink


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Except I would argue that mortgages are a waste of money too.

Posted by: Katie | Jul 21, 2007 12:35:43 PM

Why, Katie? Those for whom mortgages are a "waste," would, presumably, not get involved with one. Sometimes, of course, a mortgage loan might be taken which, in the light of the future, proves to have been mistaken--something to have been foregone had the subject been more knowledgeable or more far-sighted. But for many--buyers, sellers, builders, and families--the mortgage and the market for them is close to being "wonderful."

Mortgages are an old form of borrowing on real estate collateral but have only recently been available to "common people" and that mostly only in the West.

Benjamin Franklin (in his "Autobiography," referring to years in which he was stranded in England and worked in a printing-house) "imagined" the business of mortage lending--catering to the ordinary workman--as a potential boon simply because it would encourage thrift on their part. He observed that a very decent house could be financed on only part of that which most spent each day on their pints of ale at meal and break-times. It could be argued that they could save some of that money whether there were mortgages available or not; but we all know that many are not quite like that and need the formality and the vehicle to encourage the habit. And if some make profits--what of it? In so doing, they are rewarded for providing a service (and a large reservoir of stable values in which small depositors are rewarded for their own financial carefulness).

Posted by: gene berman | Jul 21, 2007 5:46:49 PM

He's right you know.

Buying a house on a credit card rather than a mortgage is foolish.

G. Brown Esq has been doing exactly this with
PFI in order to move the debt off the government books.

What is the betting that our union honcho tried to make a reasonably sophisticated economic point, and got quoted out of context?

Posted by: Cuchulainn | Jul 21, 2007 8:23:08 PM

"They are, as noted, like buying your house on a mortgage"

Except that at the end of the 25-year period the PFI company owns the hospital/school/whatever.

Posted by: dave heasman | Jul 22, 2007 7:06:23 PM

PFI is not really like a mortgage. It as though you bought your house with an arrangement where the Halifax (or whoever) has a monopoly over any work you want to do on your house, from fixing the heating through painting the walls down to knocking book into the wall so you can hang a picture. And it charges you £5 an hour for parking in your own drive.

Tim adds: Ah, so it's like council housing with repairs done by the direct labour force then?

Posted by: Mark | Jul 22, 2007 10:51:04 PM

For "book" in the above read "a hook". One day I'll learn to type.

Posted by: Mark | Jul 22, 2007 10:52:18 PM