[A-List] UK corporate state: PPP whitewash

["Michael Keaney" <michael.keaney@xxxxxx>]

PFI row leads to better deal for taxpayers

David Hencke, Westminster correspondent
Thursday November 7, 2002
The Guardian

The taxpayer is getting a bigger share of the profits from the controversial
private finance initiative after the scandal that allowed a consortium to
build a private prison for pure profit, parliament's financial watchdog says
in a report published today.

An inquiry launched into complex refinancing schemes on big projects,
ranging from hospitals to prisons, has revealed that civil servants are now
much less likely to be ripped off by clever businessmen.

According to the national audit office, many departments have now signed
deals that will give taxpayers anything from 30% to 50% of the profits, if a
private consortium refinances the scheme after signing the deal with the
ministry.

The schemes are the equivalent of an ordinary home owner remortgaging a
house at a cheaper loan rate - except the new deal can save tens of millions
on big projects. The row over the schemes broke after Alan Williams, the
deputy chairman of the Commons public accounts committee, got hold of
figures showing that the refinancing of Fazakerley prison in Liverpool had
enabled the consortium behind it to get back almost all the money it spent
on construction - leaving the prison service paying an annual charge that
amounted to pure profit for the consortium.

The NAO has also raised concerns about other contracts awarded under the
private finance initiative, including a report into a four-year delay in
training pilots for new Apache helicopters.

Edward Leigh, Tory chairman of the public accounts committee, said last
night: "If it had not been for the pressure from the NAO and PAC, the
taxpayer would have lost out on hundreds of millions of pounds."

He added: "I will be looking very closely at how robust these new
arrangements will be in practice."