The Conservatives have pledged to scrap PFI - Labour’s preferred method of procuring large infrastructure, according to shadow chancellor George Osborne.
Shadow chancellor George Osborne told a The Observer that PFI, which was originally developed under the last Conservative administration but embraced by New Labour, is not transparent enough and does not shift enough risk to the private sector.
He said a Tory government will come up with an alternative to PFIs, which have £206bn of public money tied up in them over the next 60 years.
Osborne said: “We need a new system that doesn’t pretend that risks have been transferred to the private sector when they can’t be, and which genuinely transfers risks when they can be.”
Under more than 640 PFI contracts set up by Labour, private sector firms will build and manage schools, hospitals, bridges and roads for as long as 30 years.
Any new government will need to secure additional funds to pay for new renewable and nuclear power stations that both parties agree on.
Borrowing to fund the expenditure, which would usually be added to the national debt, is put on private vehicles instead. But it has been criticised as “off balance sheet accounting”.
Osborne said: “The first step is transparent accounting, to remove the perverse incentives that result in PFI simply being used to keep liabilities off the balance sheet.”