Cost of UK PFI schemes soars £27bn in a year, claim Nationalists

Published on Saturday 29 November 2008 18:52

BRITAIN'S expected bill for the UK Government's Private Finance Initiative schemes has gone up by £27bn in less than a year, Scottish National Party MPs claimed yesterday.

At the time of Chancellor Alistair Darling's spring budget, PFI payments for financing public building projects between now and 2032 were expected to come to 188.6bn, the SNP claimed. According to the SNP's analysis, tables published as part of last Monday's Pre-Budget Report (PBR) now put the total at 216.1bn.

The figures were highlighted by Stewart Hosie, the SNP Treasury spokesman, who accused the Chancellor of "burying" the figures in the PBR. "We have always known that PFI was hyper-expensive, but it is clear that the liability is rocketing out of control," said Hosie, MP for Dundee East. "Labour has absolutely no financial credibility left. PFI is a millstone round the UK's neck."

He claimed that if the Treasury had to put the sums on to their own books it would add 216bn to the national debt.

"We had hoped the Pre-Budget Report would set out when and how the UK Government is going to bring PFI payments on to the books – instead we see the piles of secret debt mounting even higher."

The SNP has pledged to scrap PFI in Scotland, with First Minister Alex Salmond arguing that his alternative funding method, the Scottish Futures Trust, will create a cheaper alternative.

However, a lack of detail on how SFT would work has led to criticism of the scheme from Labour, who argue that uncertainty over the new mechanism has led to funding for schools and hospitals being left in limbo.

Leader of Scottish Labour Iain Gray denounced SFT as a "shambles", which has "created a hiatus in infrastructure projects in Scotland, undermining the construction industry".

A Treasury spokesman said of the SNP's claims: "These figures grossly inflate the actual cost of PFI projects to the Government, as they have not been adjusted to reflect inflation. PFI has delivered good value for money, improved services, and it will continue to play a small but important part in overall procurement of public services."