MPs call to stall £450m PFI Liverpool hospital job

Aaron Morby 11 years ago
Share

Powerful spending watchdog MPs have called on the Government to stall the planned £450m Liverpool Hospital project for a line by line review of value for money.

The Commons Treasury Committee has launched a stinging attack on the private finance initiative and claimed it offered taxpayers poor value for money.

The Committee report published yesterday warned the long-term costs of PFI deals were now significantly higher than conventional Government borrowing and it urged ministers to use them “as sparingly as possible” until new rules are in place.

“We ask the government to give further consideration before proceeding with the procurement, in its present form, of the Royal Liverpool and Broadgreen Hospital,” says the report.

The call is a serious blow to Carillion and Interserve, which last month were named as the two final bidders for the contract to build the Royal Liverpool.

MPs said that higher borrowing costs since the credit crisis meant PFI projects were an “extremely inefficient” method of financing.

According to the report, the average cost of capital for a PFI project is more than 8%, double the long term government bond rate.

They concluded that this extra cost was not being offset by savings and benefits in other areas of PFI projects.

Due to the financing costs involved, it said paying off a £1bn debt incurred through PFI cost the taxpayer equivalent to a direct government debt of £1.7bn.

The Treasury will respond to the MPs’ report by around October.

The CBI said the government needed to decide how PFI would develop in the future as investors needed certainty and the economy badly needed private investment.

“With the state of the public finances, it is absolutely essential we attract the billions of pounds of private finance needed to upgrade our national infrastructure and boost jobs and growth,” said its deputy director general Neil Bentley.
“To do this, investors need confidence, and the Government must decide sooner rather than later how PFI will evolve, alongside a range of alternatives, such as Tax Increment Funding and Pension Fund Financing.
He added: “It’s worth remembering that without PFI we would not have seen hundreds of much-needed hospitals, schools and homes delivered on time and within budget.”

Latest news

Graham hospital site hut complex destroyed by blaze

Site offices ravaged by fire which took eight hours to get under control
4 hours ago

Mace wins £150m over-station job at Liverpool Street

Latest win from Aviva Investors and Allianz Real Estate following earlier Moorgate contract
5 hours ago

Buyers see brighter days ahead despite resi slump

"Construction can see a path through for better outcomes in 2023"
8 hours ago

Australian firm to buy £300m gigaplant backer Britishvolt

New owner vows to complete giant factory in Northumberland
12 hours ago

Project delays curb Ardmore growth ambitions

Refurb and housing specialist sees profit fall after challenging year of delays and supply chain failures
11 hours ago

Scaffolders and sparks strike at antibiotic plant

Engineering construction workers down tools in bonus pay row
11 hours ago

McAlpine bags £1bn Sellafield concrete structures deal

Contractor signs 17-year concrete structures and groundworks framework
21 hours ago

Moving in to new markets paying off for McLaren

Contractor carving out new niche as leading player in heavy refurbs
3 days ago

Heavy materials sales fall amid slowdown in starts

Light side product sales grow helped by pace of activity for refurbs and energy-efficient retrofits
11 hours ago

Plan to add retentions record to payment reporting law

Government consults on tougher reporting to include disputed invoices and retention policies
3 days ago

Morgan Sindall wins £88m Beckton DLR depot upgrade

Delayed work to start on Docklands Light Railway train maintenance depot in East London
3 days ago

Hare and Severfield win £250m Sellafield deal

Country's two biggest steelwork contractors secure 17-year framework
4 days ago

Max Steward returns to head up ISG’s Agility fit-out arm

Former ISG project director returns after three years to take up MD role
4 days ago

McLaren wins massive Portland House refurb

Construction to start this year on £380m revamp of 28-storey building in central London
4 days ago

Green light for £275m HS2 Midlands nerve centre

Trio of contractors battling it out to win huge new depot near Birmingham
4 days ago

Winners named for Government £10bn offsite framework

29 firms secure places on mega framework for schools, healthcare, defence and justice jobs
5 days ago

ISG, Amey and Costain now industry’s quickest payers – list

Average payment times from main contractors slip by a day
5 days ago

Staff at Outco Surfacing start looking for new jobs

Administration notice filed two years after acquisition of NMC Group
4 days ago

£4.75m building work provision tips Higgins into the red

Partnerships business counts cost of changes to building safety rules
4 days ago

John F Hunt snaps up London temporary works design firm

Demolition contractor buys geotechnical and structural engineering design specialist RKD Consultant
4 days ago

Vital Energi lands £13m package at Plumstead regen site

Specialist will start on site this summer helping to transform the former home of Arsenal FC
4 days ago

Galliford Try to start £14m Scunthorpe Market scheme

Firm will build NHS staff accommodation and offices in two phases
4 days ago

Vast £500m British Library expansion go-ahead

London Mayor still needs to give final nod to 800,000 sq ft extension at St Pancras site in London
6 days ago

Wates names new chief executive

Cork-born Eoghan O’Lionaird to join later this month
5 days ago

Keltbray director joins Barhale as North East chief

Mark Wood heads operations in Yorkshire and North East England
5 days ago

Major London City building green deep retrofit approved

St Bride’s Tavern near Fleet Street will be demolished for the building expansion
6 days ago

Gilbert Ash lands starring role in £38m Welsh theatre revamp

Contractor to start work this year on Theatr Clwyd upgrade
5 days ago

Property clients to ramp up spending on decarbonising

Survey reveals nearly half of property chiefs plan to speed up spending on net-zero programmes over next twelve months
5 days ago

Average self employed labour rates top £1,000 a week

Average weekly earnings reach high for skilled trades
6 days ago

BAM wins £49m Harrogate Convention Centre revamp

Local council hopes to sanction work start this autumn
6 days ago

Contractor services