The cost of PFI

SIR – Philip Booth (Business, January 20) argues that, although borrowing costs under private finance initiatives are higher than they would be if the Government had funded the contract directly, the PFI process allows risks to be transferred to the private-sector contractor.

This is undoubtedly correct. The key question, however, is whether the cost charged by the private sector for taking on that risk represents good value for money to the Exchequer.

The recent National Audit Office report into PFI suggests that, in many cases, it does not. It found that many PFI contracts have resulted in excessive costs compared with more conventional methods of asset procurement and management. Risk transfer and the contracting out of services can be achieved in simpler, more transparent and far less expensive ways than PFI. But PFI is loved by the consultants, bankers and contractors, who can hide their excessive fees and profit margins within a complex contracting process. Phil Mills

Harlech, Merioneth SIR – I chuckled when I read Judith Woods’s article (Features, January 19) on the threatened demise of the landline due to a rise in nuisance calls.

The only nuisance calls I have received recently have been from companies offering to stop nuisance calls. When I have started to point this out I have been cut off mid-sentence. Eleanor Saunders

Chessington, Surrey