Balmoral High, a text book example of why PFI doesn’t pay

David Morrison writing for the Labour and Trade Union Review on the false economies of Private Finance Initiatives (PFI) highlights the case of Balmoral High as indicative of how costly these projects can be.

In addition to government borrowing on very poor terms, he details how the College, which has been open a mere six years, is to close leaving a bill of £9.2 million to be paid over the next 19 years.

While PFI is a British Tory concept fully promoted by Nu-Labour it has found enthusiastic supporters at Stormont with the executive unanimously endorsing plans to hand over the Civil Service Estate to PFI contractors. The plan is set to be rubber stamped by the Assembly today as part of the Robinson/DUP budget.

  • Crataegus

    PFI’s are utter folly. It is not the way to finance public building projects. If government bodies want to build the money should be raised in tax or borrowed. The work should then go through a tendering procedure etc. If they can’t afford the work then we collectively have to forgo the service envisaged. Is that too simple in this modern world?

    As for PFI’s being of the balance sheet, they shouldn’t be. I have just put together a business plan for a project and included on the liabilities end are all lease agreements etc. Only a fool or a crook puts together a balance sheet that misleads.

    The prudent course is to keep it simple and keep long term liabilities to a minimum.

  • Blue Hammer

    With the government accounts moving to IFRS from 2008/09, I think you’ll find that such projects will be required to be recognised on the face of the accounts in future.

    And previous years’ stuff restated to reflect the same.

  • I’ll not pretend to understand the ins and outs of PFI, but it just sounds like a horribly contrived and inefficient way of doing things.

  • Crataegus

    On the question of selling off Government assets. These should be put on the open market. Selling property and letting or repairing office accommodation are separate requirements. Generally to get best value you need to keep the two separate from each other.

    For various reasons I cannot say much about this but I doubt if the tax payer in NI is getting a good deal.

    Again it is a question of keeping it simple. Rogues hide in the machinations of complicated deals.

  • Star of the County Down

    Come on, you can’t lay BELB’s gross inability to project school rolls on PFI. This apparently unneeded school would likely have been built anyway, regardless of the method of funding.

  • aquifer

    PFI is very dangerous. Commercial organisations demand a very short payback on anything they invest, so there is every temptation to build cheaply, even if the door handles come off in your hand. There is also an incentive to build ugly misfits of buildings, so that people get rid of them quicker. Lets see the Post Project Evaluations for the first ones before we build any more crap.