School PFI contract end may spark ‘serious disruption’

Government must prepare for end of hundreds of PFI contracts to avoid huge costs when buildings are handed back, say MPs
19th March 2021, 12:01am

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School PFI contract end may spark ‘serious disruption’

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End Of School Pfi Contracts Could Bring Disruption, Mps Warn

Schools could be among the public services that will face “serious disruptions” if the government fails to prepare for the expiry of hundreds of contracts under the private finance initiative (PFI), MPs have warned.

The Commons Public Accounts Committee (PAC) said there were 700 PFI contracts, representing public infrastructure assets worth around £60 billion, and future costs of around £170 billion.

The earliest contracts have expired, and around 200 will expire in the next 10 years, said the PAC, warning that any mismanagement of the expiry process could result in large sums of taxpayers’ money being wasted.


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A lack of attention from public authorities running the contracts could also leave the public sector footing large bills for work that PFI companies have already been paid to do, a PAC report says.

It adds: “What is certain is that action needs to be taken now to avoid this becoming a huge payday for consultants.”

PFI companies ‘must be challenged and held to account’

The Infrastructure and Projects Authority, which estimates that it takes seven years to adequately prepare for expiry, plans to review 55 PFI contracts by the end of March, but it is unclear how these will be addressed, and at what level of government, the report says.

Since the early 1990s, the public sector has used PFIs to build hundreds of infrastructure assets including schools, as well as roads and hospitals, under deals involving the public sector entering a long-term contract with a private sector company.

When construction is finished, the PFI company operates and maintains the assets, together with running any associated services over the life of the contract, typically 25 to 30 years, in return for annual payments from the public sector.

Meg Hillier, who chairs the PAC, said: “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.

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

“These PFI contracts cover £60 billion of public infrastructure assets, carrying £170 billion 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.”

Rehana Azam, GMB union national officer, said: “PFI was a disastrous policy that saddled taxpayers with extortionate charges while low-paid workers were outsourced on inferior terms and conditions.

“As historic PFI contracts finally end, ministers must intervene to prevent a bonanza for private equity profiteers and fat-cat consultants.

“All services that were outsourced under PFI must be returned in-house to the public sector, where they belong.”

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