The scale of the bill that taxpayers have been left saddled with as a result of the controversial Public Finance Initiative (PFI) is truly staggering.
A total of 14 of the region’s local authorities have signed PFI deals in a raft of ‘buy now, pay later’ agreements costing £13bn.
At the time these deals were seen as the most cost-effective way of building new schools, homes and hospitals; however The Yorkshire Post can reveal that the majority will still be paying back millions of pounds each year in ‘unitary charges’ well into the 2030s – by which time the total bill will have far outstripped the original construction costs.
The Private Finance Initiative was established by the Conservative government in the early 1990s and then enthusiastically embraced by Tony Blair’s New Labour. It was seen by its advocates as an effective way of paying for new infrastructure investment by using contractors to pay for the construction costs and then renting the finished buildings back to the public sector, without the need to raise taxes.
Critics at the time said the government was just mortgaging the future, and so it proved. In 2011, the Treasury select committee said PFI projects were poor value for money and that this was no more efficient than other forms of borrowing.
Part of the problem was the lack of transparency concerning PFI contracts which meant it was difficult to ascertain whether or not they were good value for money. It is only now that we are seeing the full extent of the cost to the public purse.
At a time of austerity when local authorities across Yorkshire are faced with challenging budget constraints they can ill-afford to be left footing the bill for yesterday’s mistakes.
The salutary lesson in all this is there’s no such thing as easy money and what is borrowed must be paid back. We can only hope it’s a lesson learned.