PFI reform will lead to more debt
Reform of the accounting rules that govern private finance initiatives (PFI) will put billions of pounds of debt back on the government's balance sheet, according to shadow Treasury secretary Howard Flight.
Link: To read the full article by Howard Flight
Flight claimed that loopholes in the Accounting Standards Board rules gave the Treasury powers to undermine PFI work carried out in the past.
He said the complexity of the ‘Ryrie Rules’ gave Gordon Brown the chance to take as much off the balance sheet as possible ‘in order to accommodate the EU rules on government debt and Gordon Brown’s own borrowing framework’.
And ‘deliberate semantic confusion’ had arisen because the government uses the terms PFI and public private partnerships (PPP) on an inter-changeable basis.
‘Labour uses the term PPP to cover all areas of third-party involvement with the public services, including privatisation,’ said Flight.
PFIs were started by the Tories in 1992 to get expenditure off the state balance sheet. The schemes’ inability to deliver has raised eyebrows.
‘There is a pressing need for a more honest and meaningful basis of how decisions are taken to opt for PFI,’ said Flight.
The Treasury was unable to comment by the time Accountancy Age filed this article.