Labour to Blame for Investment Scheme Driving Brits Into Debt – Official

MOSCOW (Sputnik), Yulia Shamporova – A British public-private investment scheme known as Private Finance Initiatives (PFI) which imposed a debt on each British citizen came into life under the previous Labour Government, a British official from the Conservative party told Sputnik Wednesday.

On Sunday, the Independent reported that each UK citizen had accumulated a debt of 3,400 pounds ($4,976) due to the PFI program, which allowed the UK government to borrow money from private companies and banks to pay for public infrastructure including schools and hospitals and to pay those loans back with high interest.

PFI gives private companies the opportunity to get huge profits by investing in the country’s public infrastructure, but that debt becomes a heavy public burden due to high interest.

“We can point out that PFI deals came into being under the previous Labour Government, they are not a new tool being used by this [Tory] Government. This Government has modernized the way we manage these contracts, so far saving 2.1 billion pounds in efficiency gains from modernized terms of the contracts,” the British official, who spoke on condition of anonymity, said.

The PFI program, established by the Conservative government of John Major in 1992, was used in a small scale, but was significantly expanded by subsequent Labour governments in 1997-2010. Though PFI was created by Conservatives, the Labour took it to a higher level.

Despite the fact that in 2012 the Conservatives introduced a new program called Private Finance 2 (PF2), to be more transparent and efficient, in 2014 the British government's debt to banks and private companies grew to 5 billion pounds, reaching a total of 222 billion pounds. According to the most optimistic forecasts, the debt could reach 310 billion pounds by the year of 2050, the Independent reported.