PFI costs taxpayers millions

Link: Union deals critical blow to PFI plans

Despite the introduction of a new system by the Office of Government Commerce, departments have been warned that they could still miss out if they fail to manage the new arrangements effectively.

Private sector PFI contractors have been able to gain from more favourable financial terms negotiated with their lenders as the risk of a project has diminished.

But, the National Audit Office has found some refinancings had taken place without departments being aware.

‘The private sector shoulders the risk of a PFI project and is entitled to a share of refinancing gains, but taxpayers must be able to feel confident that they also are getting the money to which they are entitled,’ said Edward Leigh, chairman of the influential House of Commons Public Accounts Committee.

The NAO report revealed that government departments benefited by at least £17m through 12 completed refinancing deals. But the report said this was out of a total gain of £65m. But since last year the OGC has insisted of a 50/50 split for most deals.

Related reading