Some real costs
Tuesday, May 22nd, 2007
In the spring when Gordon Brown announced his Budget, he announced private finance initiatives to the value of over £20 billion. On one level, everybody may appear as a winner – hospitals, schools and roads can be built, welcomed by the public. For the Government all this expenditure does not appear on the state balance sheet.
The House of Commons Public Accounts Committee has been looking at whether this is all being well spent. Of the over £50 billion spent under PFI, the real long term cost may be nearly three times this amount. What has come to light is that backers of PFI schemes have been able to sell of their PFI stakes, where equity is involved, very profitably. All of this is very tempting to financial institutions.
With the huge demands on the public purse, PFI looks set to remain part of the infrastructure scheme of things. Somebody, in the future, will have to pick up the ultimate bill. Nothing ultimately costs nothing.