The PFI ‘time bombs’ that will cost taxpayers £200bn
Liverpool council owes further £47m in fees for abandoned school that cost £24m to build
Taxpayers will pay almost £200bn to cover government private finance initiatives over the next 25 years, the UK spending watchdog has warned, fuelling accusations that many of the deals are “financial time bombs”.
The National Audit Office (NAO) report - released after construction giant Carillion collapsed this week under a £1.5bn debt pile - points to egregious examples of profligate spending including schools that costs 40% more than those funded by government borrowing, and hospitals that cost up to 70% more.
The NAO found “little evidence that government investment in more than 700 existing public-private projects has delivered financial benefits”, says The Guardian.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
The GMB union said the findings showed that the use of private financing was a “catastrophic waste of taxpayers’ money” and that the private finance initiative (PFI) projects were “financial time bombs”, Reuters reports.
“Recent PFI contracts - for schools, hospitals and other facilities - are between 2% and 4% more expensive than other government borrowing, and involve significant additional fees,” says the Financial Times.
In one cited example, Liverpool City Council is due to pay a further £47m in fees for Parklands High School, although the school cost only £24m to build and was shut after 12 years after failing Ofsted inspections.
In another example, a private finance contract to build Edinburgh schools turned into a “costly embarrassment”, The Guardian says, after one of the buildings fell down and others were deemed unsafe because contractors used substandard concrete.
Jeremy Corbyn told Theresa May at Prime Minister’s Questions yesterday that PFI was a “racket”.
“Taxpayers are tied into £200bn of debt from at least 700 PFI contracts that last until the 2040s,” the Daily Mail says.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
-
The Week Unwrapped: Should we talk to the voices in our heads?
Podcast Plus Macron charms Morocco, and do Americans really work harder than the rest of us?
By The Week Staff Published
-
The week's best photos
In Pictures A spooky donation, a shirt-shredding rally, and more
By Anahi Valenzuela, The Week US Published
-
Vanessa Bell: A World of Form and Colour – an 'expansive' exhibition
The Week Recommends The 'sweeping' show features over 140 works from paintings to ceramics
By The Week UK Published
-
Brits keeping 21 million ‘money secrets’ from friends and family, survey reveals
Speed Read Four in ten people admit staying quiet or telling fibs about debts or savings
By Joe Evans Last updated
-
London renters swap cramped flats for space in suburbia
Speed Read New figures show tenants are leaving Britain's cities and looking to upsize
By The Week Staff Published
-
Should the mortgage holiday scheme have been extended?
Speed Read Banks warn that some homeowners may struggle to repay additional debt
By The Week Staff Last updated
-
RBS offers coronavirus mortgage holidays
Speed Read Taxpayer-owned bank follows measures taken in virus-struck Italy
By The Week Staff Last updated
-
What are the changes to National Savings payouts?
Speed Read National Savings & Investments cuts dividends and prizes for bonds
By The Week Staff Published
-
China clears path to new digital currency
Speed Read Unlike other cryptocurrencies, Beijing’s would increase central control of the financial system
By Elliott Goat Last updated
-
Why are donations surging to the RNLI?
Speed Read Charity enjoys flood of funding after criticism for overseas work
By The Week Staff Last updated
-
PPI deadline day: how to claim
Speed Read Final chance for consumers to apply for compensation
By The Week Staff Published