Latest Public Sector News

06.07.12

Government continues to agree new PFI contracts

PFI could ultimately cost £300bn, a new analysis of Government figures and contracts suggests. The Guardian evaluated contracts sanctioned by the Treasury and found that repayments will grow to £10bn per year by 2017/18.

The Coalition Government is still agreeing new PFI deals, despite publicly criticising Labour for its extensive use of the schemes.

717 PFI contracts are currently underway to fund new schools, hospitals and other public facilities with a total capital value of £54.7bn. 39 further projects were being procured this March.

In opposition, George Osborne pledged that the Conservatives would stop using PFI and before the 2010 election, Liberal Democrat leader Nick Clegg condemned PFI as “a bit of dodgy accounting – a way in which the Government can pretend they’re not borrowing when they are, and we’ll all be picking up the tab in 30 years”.

The expense of PFI schemes consists of ongoing running costs built into the contracts and PFI has been criticised for providing poor value for money compared with the interest rates the Government would pay if it borrowed directly to pay for the schemes.

Dave Prentis, general secretary of the union Unison, said: “We’re sitting on a PFI debt time bomb, and the sheer scale of the burden paints a seriously grim picture for the future of our public services.”

Chair of the Public Accounts Committee, Margaret Hodge said: “The irony is that we privatised the buildings but nationalised the debts. It's crazy.”

The Treasury said yesterday it expected to make an announcement soon, following a review of PFI schemes.

A spokesperson said: “The Government has already taken action to drive savings in PFI and as part of its review of PFI aims to deliver a new, cheaper model, which will ensure a fair deal for the taxpayer now and in the longer term. The Government has for the first time published a clear assessment of PFI liabilities.”

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