Tories 'would scrap flawed PFI'
Updated on 15 November 2009
The Tories would scrap the private finance initiative (PFI) and replace it with a new way of funding major infrastructure projects, shadow chancellor George Osborne has said.
Mr Osborne said the Government's use of PFI - which secures private funding for public institutions such as schools and hospitals in return for part-privatisation - had become "totally discredited".
He told The Observer newspaper: "Labour's PFI model is flawed and must be replaced.
"We need a new system that doesn't pretend that risks have been transferred to the private sector when they can't be, and which genuinely transfers risks when they can be."
Mr Osborne has reportedly asked Philip Hammond, shadow chief secretary to the Treasury, to find alternative models for involving the private sector in projects such as bridges, roads and schools.
"The first step is transparent accounting, to remove the perverse incentives that result in PFI simply being used to keep liabilities off the balance sheet," he said.
But Chief Secretary to the Treasury Liam Byrne warned that Tory plans could put public services at risk.
"George Osborne has already said the Tories would encourage hospitals to borrow against their assets and let them go bust if they fail to keep up repayments," he said.
"Is he seriously proposing to put our schools and other public services under the same risk too? Our public services should be about guarantees, not gambles."
Public-private partnerships have delivered more than £60 billion of new investment since 1997, he said.
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