Monday, June 24, 2019

Jonathon Ford - Britain needs cheaper infrastructure, not accounting tricks

I was quite surprised by this Telegraph article, where Jonathon Ford says that private companies are not anymore efficient than publicly run ones, and that there is no 'magic of the private sector'. He then adds that PPI was bad for tax payer.

EDF, an energy company, want money up front to help pay for a new nuclear reactor, but Jonathon Ford says the government could fund it more cheaply and could even start up a national infrastructure fund to finance public projects at fine rates.

Jonathon Ford says that up to the 1990's, private companies had to prove they could build public infrastructure projects more cheaply than the government could, without hidden costs turning up, like the notorious overruns. This was known as the Ryrie rules.

Jonathon Ford seems to be asking for the mixed state, and not for any ideological reasons, but because it is pragmatic and sensible.

The state shouldn’t wade in and take scads of private sector risks, but should confine itself to areas where market signals are weak and non-existent. Electricity is a good example: traditionally privately financed, it is now almost entirely strategic and state ordained.
Britain’s unlamented private finance initiative shows all too well the mistakes that governments make when they bail in costly private cash to back public projects. With the country facing fresh demands from the need to decarbonise rapidly, it cannot afford more of the same.

Jonathon Ford - Britain needs cheaper infrastructure, not accounting tricks

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