[A-List] UK corporate state: PPPs on the global market

["Michael Keaney" <michael.keaney@xxxxxx>]

Private Eye

No. 1097, 9 - 22 January 2004

PFI News

Why are so many big companies selling their stake in PFI deals?

The Eye reported recently (1095) the sale by Carillion/Tarmac of their share
in the lucrative PFI deal for a hospital in Kent, but the scale of these
sales has now reached staggering proportions. The result is that ownership
of a large chunk of the country's hospitals and schools is quietly slipping
into obscure investment funds.

A private equity group called Star Capital has acquired stakes in 25 PFI
projects worth around £2bn. Why this sudden rush? One reason is probably the
"substantial shareholdings" tax exemption in Gordon Brown's 2002 budget.
This absolves companies selling their shares in other companies in which
they have at least a 10 per cent stake from paying any tax on any capital
gains they make.

This is a tremendous windfall for the PFI industry. It allows companies like
Carillion to "save" tax on a fast buck while their buildings (hospitals,
schools, etc.), previously owned by the government, make their way into
unaccountable international investment funds.