PFI found to fail taxpayers

PRIVATE investors have been reaping the profits of private finance initiatives (PFIs) without sharing the proceeds with the taxpayer, according to an influential Commons committee.

In a scathing evaluation of private involvement in the funding of social housing and hospitals, Labour MP Margaret Hodge, the chair of the Public Accounts Committee, has called for new alternatives to PFI to be found.

She said: “Private sector investors may use the consequent economies of scale to drive up the value of their interests and generate bigger profits. We are concerned that the benefits arising from these economies of scale are not being shared by the taxpayer.

“The use of PFI and its alternatives should now be robustly evaluated.”

The findings could harm business and the future strength of the economic recovery, according to the CBI.

Elizabeth Fells, CBI head of public services reform, said: “With the public finances constrained, the role of the private sector in supporting new infrastructure will become even more important.”

Fells added: “Any moves to challenge existing contracts will undermine private sector confidence, jeopardising future investment in crucial infrastructure projects.”