Defence Training in the Balance

In a recent post I noted what the book "Squandered" had to say about Public Finance Initiatives (PFI). The latest edition of Private Eye, in its own satirical way, reports on the changes to fiscal rules and how the rules were used to hide PFI deals valued at around £200bn of future spending in order to balance the books.

"As the old rules retire, expect plenty of guff about how they have served the economy well but now's time for a change. Their real legacy will be to have forced around £200bn of future spending into private finance initiatives just so commitments could be kept off the books. Enormous waste and hare-brained ideas such as privatising defence training are the result."

The full article can be viewed here.

This leads nicely to another Private Eye article that reports on how the Ministry of Defence is getting cold feet over their plans to privatise military training. The PFI deal worth £11bn is with the Metrix consortium whose members include Qinetiq, EDS and Raytheon.

A statement regarding the Metrix negotiation was expected before the parliamentary recess but, due to there being a question mark over the affordability of the project, the Armed Forces Minister Bob Ainsworth decided a written parliamentary statement would not be appropriate at this time. This follows the recent admission by him that the credit crunch may make the project unaffordable.

""Cost growth and the implications of the credit crunch on borrowing have been a significant factor," admitted Bob Ainsworth. "The department has been working jointly with Metrix to drive the price down to seek to eliminate the affordability gap without materially affecting the scope of the project."

The figures always were marginal but with Metrix's borrowing costs likely to rise and the deal dependent on selling land in a depressed property market, the hare-brained privatisation plan could soon be pulled or drastically reined-in."

The full article can be viewed here.