Letter: Private funding of the public sector

Sir: It is always nice to be praised by a leading article in the Independent ('Good sense from Labour', 22 February) but you seem to have fallen into the trap of taking Gordon Brown's public partnership initiative at face value. It certainly contains at least one good idea: the proposal that we should change the rule that all expenditure on public sector projects is included in the public expenditure balance sheet, even if it is financed privately.

This is not a new idea: it was originally floated by John Prescott before the general election. But private sector involvement in public sector investment has all kinds of problems that neither Gordon Brown nor the Independent seem to appreciate. It is a more expensive way of raising the money, and the private sector invariably wants to take all of the profit and carry none of the risk. And as the recent conclusions of the Public Accounts Committee demonstrates, the involvement of private sector personnel and practices in the public sector seems to bring with it a risk of sleaze and corruption.

Above all, there is a danger that the private sector will, by degrees, affect the priorities and the policies of a Labour government in relation to public expenditure. No one in the Labour Party has any doctrinaire objection to using private sector money on hospitals, schools, and so on. But the Shadow Chancellor's initiative, although ingenious, does not begin to meet the question of where a Labour government will get the money to pay for the public sector investment that the British economy desperately needs.

Although the Independent (and possibly Gordon Brown) has ruled out raising taxes or borrowing more, the debate on this question is by no means over in the Labour movement.

Yours faithfully,

DIANE ABBOTT

MP for Hackney North and Stoke Newington (Lab)

House of Commons

London, SW1

The writer is a member of the Treasury and Civil Service Select Committee.