Private Funding Initiatives (PFIs) - the best way to finance a major project at the same time as keeping the risk away from the taxpayer. In theory. The latest example of where the taxpayer always gets shafted in the end is the new build in PFI schools. In a report today, MPs said that half the Government's £45 billion investment that was financed by PFI was a "risk" which could result in local councils paying over the odds for new schools. The problem lies in the length of the contracts. PFIs are usually signed for 30 year periods. If a school closes before the contract expires, councils may have to shell out millions in compensation to the firm. Just like in the case of a PFI school in Brighton, which shut after just three years, leaving the local authority to pay £4.5 million to release itself from a contract with Jarvis.
The bill for the taxpayer doesn't stop there either. Northern Ireland's education authorities will have to pay an estimated £7.4 million over the next 20 years to "maintain" a PFI school which closed this summer. Bishops Park College is Essex is being shut down - just two years after the new building was completed as part of a public-private deal. In this case Essex County Council said the amount of new homes predicted for the area had simply failed to materialise, creating the shortfall. Why was the school commissioned in the first place if there was no demand for it? So next time Gordon harps on about PFIs and PPPs challenging the risk away from the taxpayer and in to private sector, don't believe a word of it.