One might also ask why doesn't the government buy lots of things and then not pay for them? Save loads yes?
Or even better, why not simply not pay any more of the government debt back? That would save 60% of GDP + interest!
This is what you are saying on PFI in effect. PFI is a contract to purchase a building, but with performance related pay - i.e. if it is late, over budget, breaks, or is unavailable for any reason - I don't pay, the private sector does.
To deliver this the private sector borrows money and uses it to build the building and pays back the debt over time using the income from the PFI contract.
Just stopping payments would be the equivalent of not paying for goods you buy and not paying back money you borrowed.
The Civil service contracts contain no payment for services previously rendered - they are paid up to date there is no credit. PFI contracts are a credit contract based on services already delivered (the building).
A better analogy would be with accrued pension rights. These have already been given. If they were taken away for no compensation retrospectively this would mean the employee was out of pocket. Conversely if they decided just to change the pension from this point forwards then the employee could decide he no longer liked the deal, move elsewhere, and not have lost anything.
Cancelling a PFI contract is like the former, changing the redundancy rights is like the latter.
Do I agree with what the government is doing? No - it is fundamentally bad faith to do what they are doing, but the analogy is a bad one.
More technically, you might ask why does the government not activate the "Force Majure" clauses (by redefining force majure) in the contracts, pay back the debt and equity (without any return included, so all parties are just back to where they were before the contract started).
In theory the private sector has lost the right to future profits (and technically a slice of profits to date), but is no longer required to provide the services - it is worse off but not out of pocket based on services to date.
no subject
Or even better, why not simply not pay any more of the government debt back? That would save 60% of GDP + interest!
This is what you are saying on PFI in effect. PFI is a contract to purchase a building, but with performance related pay - i.e. if it is late, over budget, breaks, or is unavailable for any reason - I don't pay, the private sector does.
To deliver this the private sector borrows money and uses it to build the building and pays back the debt over time using the income from the PFI contract.
Just stopping payments would be the equivalent of not paying for goods you buy and not paying back money you borrowed.
The Civil service contracts contain no payment for services previously rendered - they are paid up to date there is no credit. PFI contracts are a credit contract based on services already delivered (the building).
A better analogy would be with accrued pension rights. These have already been given. If they were taken away for no compensation retrospectively this would mean the employee was out of pocket. Conversely if they decided just to change the pension from this point forwards then the employee could decide he no longer liked the deal, move elsewhere, and not have lost anything.
Cancelling a PFI contract is like the former, changing the redundancy rights is like the latter.
Do I agree with what the government is doing? No - it is fundamentally bad faith to do what they are doing, but the analogy is a bad one.
More technically, you might ask why does the government not activate the "Force Majure" clauses (by redefining force majure) in the contracts, pay back the debt and equity (without any return included, so all parties are just back to where they were before the contract started).
In theory the private sector has lost the right to future profits (and technically a slice of profits to date), but is no longer required to provide the services - it is worse off but not out of pocket based on services to date.