Warwick Lightfoot is a candidate in the London Primary to select the Conservative Candidate for Mayor of London. He is an economist and was Special Adviser to the Chancellor of the Exchequer 1989-92. He believes that Londoners have been "fleeced" by the PFI schemes and calls for London to receive a fairer share of national revenues so that it can afford direct investment in new infrastructure for London.
The Conservative Mayoral Primary and its hustings have shown the Greater London Conservative Party in a good light. We have shown that we are open to debate and argument and we know that as a party we have to address the concerns of everyone living in Greater London. Common themes have emerged about tackling crime, improving transport and getting greater value for money from the £10.7 billion spent through the Mayor of London’s budgets.
Clear blue water has also emerged in the hustings between Boris Johnson and me about how to finance the transport and other investment that Greater London needs. In my judgement the Private Finance Initiative (PFI) and the PPP arrangements that Gordon Brown used for the modernisation of the London Underground do not work. The private sector cannot take on the risks of such investment at a reasonable cost. Whereas the government can borrow and finance awkward risks more cheaply through the gilt market. Gordon Brown would never have allowed Scotland to be treated in the way that London has been treated in relation to the modernisation of the Tube.
In the long-run PFI increases the costs of investment. Taxpayers get fleeced and shareholders coin money. Our debate should be about getting London access to the taxes that it already pays, and not loading Greater London with higher borrowing bills that have to be paid for one way or another. London's investment is justified in economic and social terms. London generates the taxes needed to pay for this investment, but national governments have refused to give London its own money to pay for the investment it needs.
Boris Johnson offered the platitude that we should approach PFI in a non-ideological way and expressed the naïve hope that it could offer incentives for efficiency in investment. He also expressed concern that without the private finance initiative the taxpayer would have to finance London’s investment. There is nothing ideological about the present debate on PFI. It is a practical matter of the relative cost to the taxpayer in the long-run. The only ideologues on the issue are national politicians, like Gordon Brown, who construct convoluted financial rules that ensure that investment can only be carried out through PFI off-balance sheet schemes.