£200bn cost of PFI deals that lock us in until the 2040s
TAXPAYeRS will be on the hook for £199billion of debt from public-private contracts until the 2040s.
Whitehall and local councils are tied into at least 700 Private Finance Initiative deals, according to the National Audit office.
Under the contracts, firms receive long-term payments for financing and building public facilities such as schools and hospitals. The NAo says taxpayers doled out £10.3billion over the past 12 months – and face similar charges for years even if no new deals are struck.
The report from the NAo comes amid the fallout over the collapse of the construction and outsourcing giant Carillion. Jeremy Corbyn told Theresa may at Prime minister’s Questions yesterday that PFI was a ‘racket’.
‘These corporations need to be shown the door,’ said the Labour leader. ‘We need our public services provided by public employees with a public service ethos and a strong public oversight.’ The GmB union said the PFI scheme, and its successor PF2, were both a waste of money.
The NAo said that it was impossible to tell whether PFI was good value – because the Treasury was unable to come up with benefits in terms of savings.
The Treasury also could not say whether the projects were of better quality than if they had been funded by the public sector alone.
But the NAo said there were examples of PFI costing more, from the high cost of external advisers, to higher fees to lenders. ‘ There are currently over 700 operational PFI and PF2 deals, with a capital value of around £60billion,’ it said. ‘Annual charges for these deals amounted to £10.3billion in 2016/17. even if no new deals are entered into, future charges which continue until the 2040s amount to £199billion.’
The National Infrastructure Plan suggested in 2010 that capital raised through PFI cost 2 per cent to 3.75 per cent more than from state borrowing, the NAo said.
The report said there had not yet been a ‘robust evaluation’ of whether this was offset, as PFI supporters claim, by benefits such as reduced risk to the taxpayer and higher-quality facilities. meg City – page 71 Hillier, the Labour chairman of the Commons public accounts committee, said that, 25 years after it was launched under John major, there was little evidence PFI was delivering value for money.
‘ many local bodies are now shackled to inflexible PFI contracts that are exorbitantly expensive to change,’ she said. Rehana Azam, the GmB’s national secretary, said: ‘ PFI is a catastrophic waste of taxpayers’ money. Nothing can hide the chronic failure that it has proven to be over decades – Carillion is just the latest example of how bad things go wrong when public services are left in the hand of profit-hungry companies.
‘once the shiny facade comes off, PFI deals are financial time bombs that leave public bodies shackled into decades of eye-watering payments, public services unaccountable to the people and the taxpayer on the hook when things go wrong.
‘It’s time to properly fund our public services upfront instead.’
A Government spokesman said: ‘many vital infrastructure projects like roads, schools and hospitals are paid for by PFI and PF2, stimulating our economy, creating jobs and delivering better public services.
‘We have reformed how we manage PFI contracts, and through PF2 have created a model which improves transparency and offers better value for money.’
SHAReS in one of Carillion’s biggest rivals fell more than 15 per cent at one point yesterday as panic about the outsourcing sector spread. Investors dumped stock in Interserve, which has 25,000 staff, amid reports of concern in Whitehall about the firm after debt-ridden Carillion went bust on monday owing £3billion.