FUNDING a generation of British schools, hospitals and other major infrastructure through the Private Finance Initiative (PFI) model has led to more than £200bn of hidden public debt, a hard-hitting new study concludes in a damning indictment of the policy pursued by successive governments.
A report by the Centre for Policy Studies savages previous administrations for wasting vast amounts of money and racking up colossal public debt by using the PFI as a method of hiding expenditure off the balance sheet.
The study describes PFI as “one of the costliest experiments in public policy-making ever attempted”, creating a mountain of debt equivalent to £8,000 for every household in the country.
It comes as two councils in Yorkshire finalise plans for two of the largest PFI deals the UK has ever seen – the £2bn upgrade of Sheffield’s highways, that will see every road in the city overhauled in the next seven years, and the £1.1bn North Yorkshire waste contract that includes the construction of a massive waste incinerator at Knaresborough.
Both local authorities insist their 25-year deals represent value for money, and point out they have long been encouraged by central government to fund major schemes via PFI.
But the new report, written by Conservative backbench MP Jesse Norman, warns PFI is “always more expensive” than more traditional funding due to the vast amount of expensive private sector debt involved and the huge profits siphoned off by PFI contractors.
“The Private Finance Initiative has been one of the costliest experiments in public policy making ever attempted,” Mr Norman writes. “It has resulted in more than £200bn of public debt, the cost of which will hang over the British taxpayer for decades.
“It has created great private fortunes, and fundamentally reshaped the nature of our public services.
“It has generated huge public outrage, and it raises profoundContinued on Page 4.