Public services could be disrupted when PFI contracts end

Vital public services could be disrupted when hundreds of Private Finance Initiative (PFI) contracts involving schools and hospitals come to an end in the next few years, according to a new report.

The report by the public accounts committee warns 200 such contracts will expire in the next 10 years and the government is currently not prepared for the massive transfer of assets that will follow.

It adds smaller local authorities, especially those with a single PFI contract about to end, are exposed to greater risk as they often have limited resources to effectively manage expiry.

And while discussions are progressing around who is responsible for providing this support, no decisions have yet been made, according to the report.

In the past, PFI contracts were used extensively to build new roads, hospitals and schools.

According to the report, there are around 700 PFI contracts in place with assets worth a total of £60bn.

And by minimising expenditure on maintenance in the final years of the contract, the contract warns PFI investors can pay out higher dividends and walk away with limited threat of recourse.

‘We are about to see a wave of PFI contracts come to an end. These require careful and advance challenge to ensure that the asset is handed to its public sector owner in good order. These include schools and hospitals,’ said committee chair, Meg Hillier.

‘The taxpayer could end up with a huge bill if PFI companies are not challenged and held to account.

‘These PFI contracts cover £60bn of public infrastructure assets, carrying £170bn of associated costs. Crunch time is approaching and taxpayers need to be alert to the risk. Public bodies and the Treasury need to be on top of this issue now.’

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