Tough action announced by the Government today to save more than £1.5 billion from the Private Finance Initiative, is welcome news.
In a Written Ministerial Statement delivered to Parliament, Treasury Minister Lord Sassoon laid out Government plans to save more than £1.5 billion on existing PFI deals, and to plough much of that money straight back into frontline public services. The announcement comes after a series of forensic investigations by Treasury experts into PFI contracts.
Under a PFI contract the government effectively rents a capital asset, such as a school or hospital, from a private sector company. Many of the deals, almost all of which were signed off by the previous government, have proved to be disastrously bad value for money – with many firms making huge profits at the taxpayer’s expense.
I am part of the PFI Rebate campaign of more than 80 MPs, from all three major parties, who have been calling for savings on the PFI. Our target of £1 billion has been significantly exceeded. The government has listened and taken our campaign very seriously. This announcement will mean real savings and a real improvement in our local public services.
The actions announced by the Government are deliberately cautious; they are a long-term solution to a long-term problem. This kind of detailed forensic work may not be glamorous, but it is vital if we are to clear up the economic mess left by the last Labour Government.
19th July 2011