THE COST of building schools and hospitals using the controversial private finance initiative (PFI) should be included on the government’s balance sheet, a group of influential MPs will say today.
In a highly critical report, the Treasury select committee will say that PFI does not provide taxpayers with good value for money and recommend that tough new rules be introduced to reduce the government’s reliance on the funding mechanism.
Former chancellor Gordon Brown signed off hundreds of public construction projects using PFI, which allows the government to borrow from the private sector to finance schemes while keeping the liabilities off of its books.
But the funding method has proved incredibly costly, according to official figures. More than 900 schemes have been completed with a total capital value of £56bn – yet the amount the taxpayer will have to repay stands at £229bn and is rising.
Andrew Tyrie MP, chairman of the committee, said: “We can’t carry on as we are, expecting the next generation of taxpayers to pick up the tab. PFI should only be used where we can show clear benefits for the taxpayer.”
Despite dismissing PFI as “discredited” before the election, chancellor George Osborne has backed over 60 projects worth almost £7bn since entering the Treasury.