It's official. The Private Finance Initiative (PFI) is a waste of money. Tens of millions of pounds may have been wasted on refurbishing social housing in London under the Private Finance Initiatives, the public spending watchdog warned last month.

PFI was a system invented by the Tories before 1997, but enthusiastically embraced by New Labour, whereby contacts for public projects were handed out to private companies. They would then own these projects and charge us for their use. Clearly, once the firm landed the contract and got their foot in the door. they had the public sector over a barrel. Delays and cost overruns were built in to the PFI system.

In a damning report, the National Audit Office highlighted a string of schemes where costs had spiralled and projects had been delayed.
The NAO identified six council housing projects in London where there had been a significant increase in costs:

• Islington: £55 million to £165 million.
• Lewisham: £44.6 million to £115.91 million.
• Canning Town, Newham: £16 million to £31.89million.
• Camden: £30.6 million to £65 million.
• Islington again: £20 million to £74.69million.
• Newham again: £22.1million to £55million.

The spending watchdog also said that many PFI housing schemes had suffered from long delays. Nicholas Cecil reported in the London ‘Evening Standard’ (30/06/10) :
“The target date for contract signature on the 900-property Forest Gate scheme was December 2003 — but it was delayed until January last year.
“The delay for the Chalcots Estate project for 603 homes was 52 months, 47 months for the Canning Town scheme, 44 months for the Brockley Housing project, 33 months for the Street Properties Islington 2 initiative and a year for the Street Properties Islington 1 scheme.”

Some local authorities feel that PFI procurement is excessively costly and takes too long. It’s too late now. PFI was a huge scam gone along with by New Labour. For instance former Health Secretary Alan Milburn told NHS managers that it they wanted new buildings “it was PFI or bust.”

The idea was that, since the borrowing was off the government’s balance sheet, it didn’t exist!  However, it has now been reported that the NHS is facing a bill of £65 billion for projects that should have only cost £11.3 billion  when they were constructed (Private Eye 20/8/10). This has left some health trusts in severe difficulty.