PFI funding has not delivered “best possible value” for taxpayers in the past but this must change, Treasury Select Committee chairman Andrew Tyrie said today.
Tyrie welcomed the Government’s response, published today, to his committee’s report on PFI. But he argued that it did not fully address the issue that national accounting is an incentive to use PFI because it excludes it from Public Sector Net Debt.
“We must avoid using PFI solely as a means of placing Government finance off-balance sheet,” he said. “Value for money is crucial.”
Tyrie said PFI might be suitable for projects when the risk associated with future demand and usage of an asset can be transferred or when the benefits of private sector management outweigh the higher capital cost.
He argued that it was “right” to explore other mechanisms of private sector funding of projects laid out in the National Infrastructure Plan 2011, as the banks are currently less willing to lend on these.
But he warned: “The Government must be cautious about taking on further contingent liabilities or providing guarantees that could lay additional costs at the door of future taxpayers.”