20 Aug 2011
The Green Party have welcomed a report from the Treasury Select Committee of MPs, saying that it endorses their long-held position on the Private Finance Initiative (PFI). PFI is used to gain private sector money for public projects.
The report described PFI as "extremely inefficient" and inherently inflexible (especially for NHS projects). It said that it is an "illusion" that PFI shields the taxpayer from risk.
The cross-party report also pointed out that the long-term expense of PFI deals are now much higher than more conventional forms of borrowing.
MPs found that the cost of capital for a typical PFI project is over eight per cent - double the long-term government gilt rate of approximately four per cent.
It also emerged that the majority of PFI debt does not appear in official data. If it were, the UK's national debt would increase by £35 billion, or two and a half per cent of GDP.
"We need efficient, high quality and publicly-owned services provided in the most cost effective way," said Caroline Lucas, Green Party leader and MP for Brighton Pavilion.
She pointed out that in opposition, both George Osborne and Vince Cable said that PFI was poor value for the taxpayer. Osborne, now Chancellor, described it as "a discredited model" whilst. Cable, who is now Business Secretary called it "a dishonest system of accounting, designed to hide taxpayers' liabilities".
Lucas insisted that, "Local schools and hospitals should be publicly owned and publicly accountable - not primarily vehicles for private profit. Instead, with PFI, we have had businesses build schools and hospitals, and then we pay them several times over for the privilege."
The Green Party opposes private financing schemes, and is calling for public funds to be used to build all new hospitals, schools and other public service infrastructure.
Lucas added, "If the renegotiation of existing privatised contracts is impossible, the government should at least aim to bring all affected facilities back into public ownership as soon as possible".
Posted by Derek Wall at 12:32 pm