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The hidden costs of PFI
FS Focus takes a look at whether PFI is the new Enron scandal.
Private finance initiatives (PFIs) have been described as many things in the past, a ‘fraud on the people’ a ‘doomed economic philosophy’ and a ‘great heist’ spring to mind to describe the controversial concept.
PFI projects, in rudimentary terms, involve private sector investment being used to deliver public sector infrastructure. The private sector project finance is underwritten by the public, and the asset is then leased back to the public under long-term arrangements, often for 25 years or more. This has resulted in some eye-watering costs to the taxpayer, examples including £320 for a plug socket at a school, £52,000 for a job in a hospital that cost the private contractor £750 and a total PFI bill to the taxpayer estimated at £229bn.