“A Labour pledge to bring “wasteful” PFI contracts back in the public sector would cost a massive £671m in Devon, it has been revealed.
Shadow chancellor John McDonnell told the annual party conference last month the contracts were set to cost the taxpayer £200bn over coming decades and private companies were making “huge profits”.
The cost to the county for all the buildings, such as schools, hospitals armed forces’ accommodation, funded by private finance initiatives was estimated to be around £2.4bn just four years ago.
Newly released figures by the county council show that Exeter Schools would cost £210m to buy out with £322m for an energy for waste (EFW) plant and £139m for a Devonport EFW scheme. …
… Private companies carry out the construction work and maintenance, in exchange for regular payments from the taxpayer.
It has proved controversial with criticisms that it is overly generous to the private contractors.
Some schools, including in Exeter, have said the quality of parts of their new buildings have been poor.
Other public bodies, such as hospitals, have complained that large debt repayments, over long periods of time, make it difficult for them to balance their books.
However, defenders of PFI said it provided new infrastructure which would otherwise be unaffordable.
The biggest margin on a project in Devon came with a deal for new accommodation for services’ personnel at Devonport Naval Base in Plymouth.
Its estimated cost of £554m, which will also include service and maintenance charges, is more than 12 times the initial building price. …
… Devon County Council said it could not “accurately” estimate the cost of terminating contracts without going into negotiations.
Cabinet member for finance John Clatworthy said the schools PFI contract in 2005/6 was £348m.
He wrote: “Set against this was a grant of £248m that would be received from central government – of the balance, £75m would be met from the delegated schools budget and the remainder (£75m) would be met by the council.”