The PFI ‘time bombs’ that will cost taxpayers £200bn
Liverpool council owes further £47m in fees for abandoned school that cost £24m to build
Taxpayers will pay almost £200bn to cover government private finance initiatives over the next 25 years, the UK spending watchdog has warned, fuelling accusations that many of the deals are “financial time bombs”.
The National Audit Office (NAO) report - released after construction giant Carillion collapsed this week under a £1.5bn debt pile - points to egregious examples of profligate spending including schools that costs 40% more than those funded by government borrowing, and hospitals that cost up to 70% more.
The NAO found “little evidence that government investment in more than 700 existing public-private projects has delivered financial benefits”, says The Guardian.
The GMB union said the findings showed that the use of private financing was a “catastrophic waste of taxpayers’ money” and that the private finance initiative (PFI) projects were “financial time bombs”, Reuters reports.
“Recent PFI contracts - for schools, hospitals and other facilities - are between 2% and 4% more expensive than other government borrowing, and involve significant additional fees,” says the Financial Times.
In one cited example, Liverpool City Council is due to pay a further £47m in fees for Parklands High School, although the school cost only £24m to build and was shut after 12 years after failing Ofsted inspections.
In another example, a private finance contract to build Edinburgh schools turned into a “costly embarrassment”, The Guardian says, after one of the buildings fell down and others were deemed unsafe because contractors used substandard concrete.
Jeremy Corbyn told Theresa May at Prime Minister’s Questions yesterday that PFI was a “racket”.
“Taxpayers are tied into £200bn of debt from at least 700 PFI contracts that last until the 2040s,” the Daily Mail says.