Quote:
Originally Posted by Maggy J
But mostly at present it doesn't work well.
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You are quite right Maggy.
The
Treasury report in 2011 highlighted the shortcomings of PFI and called into question it's supposed "Value for money". It even went as far as to suggest it was used as a means to conceal debt.
"The price of finance is significantly higher with a PFI. The financial cost of repaying the capital investment of PFI investors is therefore considerably greater than the equivalent repayment of direct government investment. We have not seen evidence to suggest that this inefficient method of financing has been offset by the perceived benefits of PFI from increased risk transfer. On the contrary there is evidence of the opposite. Organisations which have the option of other funding routes have increasingly opted against using PFI and have even brought PFIs back in-house. TfL's cost of borrowing is higher than government's, and yet it still considers this is overall better value for money than PFI. 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."
The coalition, in Osborne, has even since then been throwing PFI contracts around like confetti. No lessons learned there, obviously. Like his predecessors many of his friends will be making a killing from these contracts.
Still, PFI was after all a Tory idea so we should expect nothing less.