Sunday, 8 January 2017

PFI? Should Have Gone to Brighthouse



A while ago the All Party Parliamentary Group on Debt and Personal Finance published a report on so called 'rent to own' stores the best known of which is probably Brighthouse (2015 APPG Report on Rent to Own). The report was damning, accusing them of cashing in on people's financial struggles. I know from experience that it is so easy to find yourself in financial shock when the cooker suddenly breaks down or the fridge is beyond repair. Your options to finance a purchase of this magnitude can be severely limited and there may be little choice but to go for rent to own. The APPG report gave a raft of recommendations to make the rent to own weekly payment stores operate more fairly and transparently. There is some justification for the APPG intervention, too. A fridge from an online retailer which cost £176 would cost £468 from a weekly payment store after paying, drip drip style for 156 weeks. That's a staggering 165% mark up.

More recently there were the comments from the British Red Cross Chief Executive expressing his view on the state of the NHS. Whereas most sensible commentators will view his humanitarian crisis reference to the NHS as misguided and to some 'unhelpful' the moribund Labour Leadership took this as a cue to activate their weaponisation. With liberal use of a hashtag, #NHSCrisis, they hoped to set the social media world alight with indignation on the Government's running of the National Health Service. The response was full on from the loyal followers of Jeremy Corbyn with perhaps a special prize for Paul Mason whose self imposed exile from his broadcaster paymasters has allowed his left wing lunacy to bloom bright red. Despite even his best efforts on twitter there was no ground swell of support for their latest efforts. 

There was, however, a stark reminder of the legacy that Labour left to the NHS. As a parting gift in 2010 the out going Chief Secretary to the Treasury left that famous note, to the NHS Labour left PFI. Just as with rent to own PFI meant that there was no upfront payment and, just as with rent to own, payment is by regular installments. At the end it's yours to keep. This is where the parallel ends. That fridge would be yours after paying 165% more than you'd pay for it from an online retailer. With PFI, as well as repaying for literally decades, the interest, based on HM Treasury figures, works out as a staggering 581%, well over triple that of Brighthouse.

The APPG recommended that rent to buy stores, Brighthouse included, should have health warnings so that people are aware of the total cost. I completely agree, and as PFI is over three times more expensive to fund than buying from a weekly payment store, hospitals funded in this way should also prominently display similar information so taxpayers are completely aware that not all health care funding goes on health care but also pays for Labour's disastrous misuse of PFI and we will be doing for many years to come.