PFI to cost additional £20 Billion

The much maligned Private Finance Initiative scheme is under further attack as it is revealed existing schemes will cost and additional £20 Billion to finance.  The money is to cover the extra borrowing costs for the current 700 schemes to run hospitals, schools, prisons and other public sector projects, currently valued at £53 Billion.

The Treasury is at odds with the Commons public accounts committee, insisting that PFI was only used where it proivides best value for money, a message that the public accounts committee spokesman, MP Richard Bacon, does not believe reflect the current situation.

Secondary PFI Market

The BBC Business website ( http://www.bbc.co.uk/news/business/ ) reports that there are significant concerns that HM Treasury is failing to monitor PFI projects adequately and that excessive profits have been made by organisations involved in the PFI market.  HM Treasury records do not reflect the billions of ponds of profit made by companies by selling on their equity shares in PFI projects on the secondary PFI market.  These concerns regarding the transactions and those surrounding the lack of information at HM Treasury come as two parliamentary committees are convened to take an in-depth look at the PFI.

The Treasury Committee is hearing evidence in connection with its enquiries into the future of PFI, the objective to determine whether PFI has represented value for money for the taxpayer. Shortly after the Public Accounts Committee will investigate what can be taken from the experience of the roll-out of PFI and what improvement could be made for any future projects that may be undertaken.

Opinions run high on both sides of the discussion, with a number of members of Parliament declaring that the PFI process must be clear and transparent with levels of profit reflecting genuine return on investment and, of course, demonstrating good value for money for the public purse.  The  Public Private Partnership Forum, an industry body for the PFI industry, has said the profits made were a fair reflection of the risks taken on by the financiers and builders of the projects.

More than 700 hospitals, schools, prisons and other public sector projects have been built under the PFI scheme.