PFI agreements are bad value for money say MPs
Private Finance Initiatives used to fund construction of schools and hospitals offer little value for money, according to a group of MPs.
The BBC reports that the Treasury Select Committee has deemed the scheme no better than other forms of borrowing, and it was actually an “illusory” method of shielding the taxpayer from risk.
The government says they have already attempted to make PFI agreements more transparent and rigorous following accusations that the true costs of PFI were being hidden and were excluded from government debt calculations.
The Conservatives introduced the PFI scheme in 1992 to use private funding to pay for public infrastructure projects. However, the Labour government came under increasing criticism for the ultimate liabilities, which this scheme presented to the taxpayer.
Now the Treasury are considering the long-term costs of the PFI agreements, which for every £1 billion of debt will cost the taxpayer £1.7 billion.
The government has already announced plans to save £1.5 billion off existing projects and has abolished PFI credits to remove their advantage over other forms of finance.
Now the CBI is calling for the government to decide how to develop the PFI scheme, to ensure that private finance is now attracted to boost infrastructure, jobs and growth.