PFI spree ‘left every family with debts of £8,000’

issues of fairness between this generation and the next.”

Under PFI, public bodies typically sign lengthy complex contracts with private firms for the construction and on-going maintenance of a new public works scheme, rather than meeting the up-front construction costs.

The system is attractive to public bodies because it provides certainty over costs and, crucially, the obligations do not show up as debt on balance sheets as they would if the money had simply been borrowed in the traditional way.

Although first introduced by Conservative Chancellor Norman Lamont in 1992, the use of PFI was accelerated dramatically under New Labour under Gordon Brown.

Mr Brown was able to use PFI to fund a decade of public works while keeping the debt off his balance sheets, so upholding his own so-called “golden rules” over the level of public debt. But all the borrowing for most PFI schemes was carried out by the private contractor involved, at far higher interest rates than those available to the Government.

All the costs are eventually passed on to the taxpayer, meaning the schemes typically end up costing many times more. Many of the contracts have proved deeply inflexible, meaning facilities such as PFI hospitals can not be easily adapted to meet the changing need of the local NHS.

Tim Knox, director of the Centre for Policy Studies said: “The extraordinary cost and opacity of PFI under New Labour must never be allowed to happen again.

“Over £200bn of new infrastructure is needed over the next decade. We cannot afford to get it so wrong again.”

The coalition has been highly critical of PFI as a funding method, with Chancellor George Osborne describing it as “discredited”.

A Treasury review ended in February but no report has yet been published. In the meantime it has continued to sign off deals such as those in North Yorkshire and in Sheffield, which have been many years in the planning.

Last year a Yorkshire Post investigation revealed the North Yorkshire waste contract would cost taxpayers more than £400m in interest payments alone.

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