Brown's rule rewriting
Published Date:
22 July 2008
The Prime Minister "may be set to ditch" his rule that public borrowing should be no more than 40 per cent of GDP (your report, 19 July). But if borrowing to build schools and hospitals by PPP/PFI had been included, it would already have been broken.
The private firms borrow capital in the first instance, but recover the cost of capital and interest from the taxpayer over the 30 years of the contract. So while PPP/PFI cuts the apparent amount of public borrowing, it does not transfer the cost of buildings to the private sector. It costs the taxpayer more than if a public authority had done the borrowing.
The 40 per cent rule was invented by Gordon Brown and the idea was sold that schools and hospitals could not have been built without PPP/PFI. Yet they could have if he had allowed public-sector borrowing above the rule. If he does, he abandons also the main argument for PPP/PFI.
RONNIE CRAMOND
Oswald Road
Edinburgh
The full article contains 172 words and appears in The Scotsman newspaper.
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Last Updated:
21 July 2008 8:38 PM
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Source:
The Scotsman
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Location:
Edinburgh
