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Friday, 19 August 2011

Bye, bye, bye, PFI

THe next big blow as the next recession bites will be in the pocket books of the PFI Conference organisers, lawyers, accountants and manageent consultants who masquerade as financial advisers while in reality doing little more than filching from the public purse.

Treasury Select Committee chairman Andrew Tyrie has told minitesrs that they should limiti the use of PFI deals until new rules were in place.

‘PFI means getting something now and paying later. Any Whitehall department could be excused for becoming addicted to that. We can’t carry on as we are, expecting the next generation of taxpayers to pick up the tab. PFI should only be used where we can show clear benefits for the taxpayer.’

His committee's report added ‘The incentive for government departments to use PFI to leverage up their budgets, and to some extent for the Treasury to use PFI to conceal debt, has resulted in neglecting the long-term value-for-money implications. We do not believe that PFI can be relied upon to provide good value for money without substantial reform.’

While PFI had always been more expensive than traditional government borrowing, the gap has widened ‘significantly’ since the financial crisis.

‘We believe a financial model that routinely finds in favour of the PFI route, after the significant increases in finance costs in the wake of the financial crisis, is unlikely to be fundamentally sound. Continuing to use an inefficient funding system such as PFI is likely in many cases to increase the overall burden on taxpayers for the provision of public sector capital projects.’

1 comment:

Demetrius said...

Yes indeed, this has become a racket that has inflicted real damage in some areas because of the cost effects. As someone engaged in local government capital projects decades ago looking at the figures and the numbers of "consultants" and others involved it is astonishing that so much has been leached out of public funds. To its credit "Private Eye" has been having a go at this for some time now.