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The Third Way... make the third generation pay

This article is more than 24 years old
Nick Cohen

The Organisation for Economic Co-operation and Development is a reputable body. When its economists said last week that even the Germans have lower taxes than the British they deserved to be taken seriously. But so do the researchers at the London School of Economics, and the Liberal Democrats - who in their different ways have shown that Tony Blair's record of investment in schools and hospitals is worse than John Major's. So, too, do our senses, which have amassed ample evidence that slum services, an ill-educated and unhealthy population and deadly railways provide a forlorn backdrop to Millennial Britain's groovy capitalism.

Faced with conflicting figures, the casual reader is tempted to mutter lies, damned lies and statistics, and reason that it surely isn't possible for the Government to run up tax demands and run down services simultaneously.

But casual readers may have missed the Private Finance Initiative. The Government's cowardly and imprudent method for funding every public work, from the modernising of the London Underground to the computer system at the Passport Office, has a curious effect on those who have penetrated its mysteries. Mild academics start snatching imaginary flies from the air. Respectable accountants confess to an urge to lock strangers in neck-holds and scream: 'Do you know what the bastards are doing?' They are exasperated as much by the lack of a debate in England, if not Scotland, as by the policy. The Tories have no wish to make a fuss about a privatisation of £84 billion of common property which will allow corporate executives to enjoy their lunch for 30 to 60 years. If Labour wants to move to the right of Thatcher and sell off NHS hospitals, why should they object? Without a lead, those outside the political class have found it hard to grasp Treasury policy, particularly when, in a variant of the Windscale/Sellafield gambit, the initiative's name was changed to Private-Public Partnerships to baffle the few who were beginning to comprehend.

In place of an informed discourse, there have been local controversies as citizens discover that the new hospital they longed to see built will cost them and their children and their grandchildren a fortune while providing fewer beds, doctors and nurses. Going to the grass roots therefore remains the best way to understand the neglected scandal. The stories breaking out in weekly papers aren't parochial but signs of a slow-burning crisis. I'll pick on the plans to rebuild the Pimlico School near Westminster, not only because it shows the initiative's folly in miniature but because it allows me to have a pop at Jack Straw, Tony Blair and Gordon Brown in the space of a short article... my idea of heaven.

Pimlico School is an open and optimistic Sixties building which in the opinion of many architects ought to be protected as one of the few saving graces of brutal modernism. As it is one of a handful of state schools to which Cabinet Ministers are prepared to send their children, it is also a plea of mitigation for the inner-London education system.

By the time of the last election, it needed about £10 million-worth of repairs, mainly to its windows and roof. For Pimlico, as for every other public project at that time, the money could either be raised by local or national taxation or by the Government borrowing at low rates on the international money markets. But the old rules were being torn up. Blair and Brown were abandoning social democracy and reaching their warm accommodation with Thatcherism. Instead of telling the country honestly that better services had to be paid for, they seized on the Conservatives' initiative as an alternative to honest government.

PFI has one great advantage for politicians: it allows them to duck responsibility. It is like paying on tick. Instead of spending taxes upfront on necessary work, the Government 'rents' a new hospital, say, for decades at fantastically expensive annual fees. At first glance, it appears to deliver spanking new services without unpopular tax rises. By the time people realise they have in fact been bound into extortionate contracts, our leaders will be long gone.

Pimlico was told only minimal public money for repairs was available. The school had to go to the private sector. Construction firms weren't interested in a piddling refitting. They wanted £49.5 million for knocking the school down, selling off part of its grounds for luxury housing, building a new school and leasing it back to the local council. Conservative estimates put the potential profit at £10m. A Government that insists it cares about every penny of citizens' money was raising the cost fivefold. Unsurprisingly, this atrocious offer began a ferocious local conflict which has stalled all work to this day.

In a dissection of the Pimlico farce in the current issue of Public Finance, Jean Shaoul, an academic accountant, estimates that, even if the flats sell for a fortune, local taxpayers will have to pay the consortium £850,000 a year at today's prices for 35 years. To earn the revenue, 100 more children would have to be stuffed into classrooms.

The same pattern is being seen in the NHS. Perfectly sound hospitals in Swindon and Coventry are threatened with the bulldozer because dividends come from expensive new buildings with fewer beds. The tail is now wagging the dog and the shape of the public sector is being determined not by democratically accountable institutions but by the demand to maximise corporate profits.

Pimlico parents saw their children spending five years being shunted round a building site while their school was torn down in stages and rebuilt around them. Teachers threatened to resign. The pupils, showing a better grasp of finance than most of the rest of us, went on strike, saying that a rise in costs from £10m to £49.5m was a terrible deal. However, Jack Straw, whose children were at Pimlico, was determined that the school should be a 'national pathfinder'; one of the first attempts to see if PFI could provide an escape from the contradictions of the Third Way. He was not explicit about his ambitions when he stood for re-election as a school governor. His 1997 manifesto said 'We will not sign up to plans unless we are convinced that they will carry the support of parents': 85 per cent of parents signed a petition against demolition. Yet Straw was determined to destroy his school and build a new one. On a winter's evening, he introduced a Bill on gay rights in the Commons, dashed to Pimlico to appear before a hopelessly split governing body and panted back to Parliament to sum up.

Straw was committed to PFI, even though the laughable private attempts by Siemens to put computers into the Passport Office and Asylum Department paralysed his bureaucracy. Yet the parents were telling their governors they did not want PFI. Were the best interests of the school and the best interests of New Labour as one, opponents asked.

The result of four years of ferocious wrangling has been a disaster for Pimlico. The children have been punished because their parents and half the governors refused to subsidise the corporate welfare state. There has been no substantial investment since 1995. Truancy has grown and teachers' demands for better security have been ignored. A neighbouring school with identical problems, but which agreed to be demolished and rebuilt by private contractors, has been given £375,000 to deal with juvenile delinquents. The money was from Jack Straw's Home Office.

Is Ramsbotham just one more victim of snob rule?

The alliance of snob and mob is hardly new. In our era, the élite's trademark tactic of condemning anyone who criticises its use of populism to sustain itself in power as 'élitist' is played by politicians, pin-brained style journalists, big business and academics in the dead end of cultural studies.

But I suspect that even the most cynical aristocrat would have blinked at the insults that have been thrown at Sir David Ramsbotham for telling the New Statesman that the boys who killed James Bulger should be freed when they were 18. The Chief Inspector of Prisons was merely agreeing with the trial judge's original sentence in 1993. His verdict was overturned when a Sun campaign persuaded Michael Howard, a Home Secretary who was notable by his absence from the court when the evidence was aired, to all but double the punishment to 15 years.

Since talking to the Statesman, the abused Ramsbotham has been forced to apologise by Straw and Widdecombe - neither of whom can bear to leave a rabble unroused. Not content with humiliating a man who occasionally embarrasses them by telling the truth about life in our booming penal-industrial complex, the élite has turned on the magazine for running Ramsbotham's mild views.

Both the Statesman and Sir David have been threatened with prosecution by the Official Solicitor whose job it is to protect children. They are accused of breaching court orders by giving details of 'the whereabouts or care or treatment' of Robert Thompson and Jon Venables. I've read and reread the offending Statesman and could find no sign that Sir David had done anything of the sort.

Watchers of the Official Solicitor's office won't be surprised. We have come to see its lawyers as embodiments of élite-populism. When Sarah Keays wanted to get publicity about the illness of her daughter by Cecil Parkinson, they imposed gagging orders and all but threatened to take her child away if she continued to embarrass the then chairman of the Conservative Party by reminding the public tangentially of the affair. Yet when the press and politicians ignored court orders and revealed the identity of Mary Bell, they sat on their hands for a week. It is entirely consistent that they are now telling Sir David and the Statesman that the only rules you can't break are the snobs' rules of mob justice.

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