27th September 2011The chair of the Commons public accounts committee has argued that the private finance initiative (PFI) is too expensive to be used as a driver for economic growth.
Speaking on the second day of the Labour Party's annual conference in Liverpool, Margaret Hodge noted that PFI had served as "the only show in town" for the funding of public infrastructure projects over the last decade.
However, Hodge told the 'Investment, growth and PFI' fringe meeting that the initiative had proved too expensive and inefficient.
She said: "Under Gordon Brown PFI was commonplace and quickly took over the market for public infrastructure projects. Unfortunately, we can now see that PFI chokes investment and therefore chokes growth.
"We can't afford PFI as part of the strategy for growth. It simply costs too much money."
The private finance initiative was a strategy initially developed by the British and Australian governments to fund public infrastructure projects with private capital.
As a procurement method it was adopted widely by the New Labour administration, yet has proved controversial.
Hodge's public accounts committee published a report earlier this month describing the PFI as "a better deal for the private sector than the taxpayer".
Also speaking at Monday evening's fringe was Gillian Fawcett, head of public sector at the ACCA, joint hosts of the fringe.
Fawcett concurred that PFI had quickly become integral to the financing of public projects.
"We have little option other than PFI," Fawcett said. "Given the current economic circumstances it is unlikely that an alternative will arise, so we need to ensure that value-for-money assumptions that are made are clear and reasonable."
Continuing the theme of dependency on the initiative, Professor George Irvin of SOAS decried PFI as "a terrible waste of money" and argued that the scheme had been "nonsense from the beginning".
Presenting a broad consensus, the fringe panellists agreed that whilst PFI appeared to be the sole method of public infrastructure procurement and raised a number of concerns, there appeared to be few viable alternatives.
'Investment, growth and PFI' was hosted by the Social Market Foundation and the ACCA.