14 June 2011
The government is failing to monitor "excessive" profits from the selling-on of Private Finance Initiative (PFI) equity in many of the 700 hospitals, schools and prisons that have been built under the scheme.
Part of the problem is the failure of HM Treasury to keep up its records of millions of pounds made by private sector partners selling on their PFI equity, a BBC report claims.
The selling on of the equity sometimes can be for large amounts of cash. This calls into question the amount of profit that having that equity can generate over many years, up to 25 in some cases.
Critics of PFI argue that if buying the equity is so attractive, then the taxpayer may be locked into a decades-long deal that is very poor value for money. If so, the taxpayer should get some cash repayment when private sector equity is sold on.
The BBC says that it had asked five of the companies which had sold equity in Calderdale Royal Hospital in Halifax to disclose the profit they had made. However, the companies said that the information was commercially confidential.
The Treasury told the BBC that it collects PFI information and updates data twice a year from departments on changes of PFI share ownership and the information published on the Treasury website
. Data exists on 81 per cent of PFI project.
A File on 4 report on BBC Radio 4 at 8 PM tonight (Tuesday, June 14) examines the selling on of PFI equity.
Also today, the Treasury Committee
begins hearing evidence as part of its ongoing inquiry into PFI contracts. Later this week the Public Accounts Committee will examine lessons learned from PFI.
A report produced by the European Services Strategy Unit
think tank analysed 154 PFI projects. Private sector shares in Calderdale had changed hands nine times since 2002, said Dexter Whitfield, the report’s analyst.