The private sector is set to pocket £7.3billion in public payments over the lifetime of 39 Private Finance Initiatives (PFI) including a pharmacy lab and two schools in Londonderry, it’s emerged.
That’s not far off the annual £10billion subvention from the Treasury that accounts for 93 per cent of the Northern Ireland Executive’s annual funding needs.
A new report by the public spending watchdog reveals the staggering funding requirement over the course of the contracts, some of which last for decades.
The Northern Ireland Audit Office (NIAO) says £7.3billion will be “paid to the private sector over the full life of the individual contracts for construction, operations, lifecycle and maintenance costs, on a whole life basis.”
The NIAO also reveals that £2.5billion of the PFI payments are due to be paid over the next decade and the annual cost of PFI payments to the private sector is £253m.
The Sentinel has previously reported how the two longest public private hospital contracts in Northern Ireland are in the Western Trust.
United Healthcare Land Company Ltd. - a consortium of developers, investors and insurers - paid £15m upfront to build an Altnagelvin laboratory for one of these PFIs.
The group will be paid at least £58.9m over the next two decades from the public purse.
The Roman Catholic Derry Dioceses Project also entered a PFI with private sector providers and a Public Private Partnership (PPP) operator in 2008 to build the new St Mary’s and St Cecilia’s schools in Londonderry.
Before Christmas Education Minister John O’Dowd revealed there were 22 years remaining on this contract and that the total cost was £163m over the 25 years of the project.
The new report by the NIAO entitled ‘The Future Impact of Borrowing and Private Finance Commitments’ warns that: “Currently there is no central collection of PFI costs and commitments or dissemination directly to the NI Assembly.”
Under the current system OFMDFM arranges for PFI statistics to be returned to the Treasury and it publishes the results online.
The report explains that the Department of Finance and Personnel (DFP) also prepares and submits returns that feed into the overall consolidation and publication of a UK wide Whole of Government Accounts (WGA). But the Executive does not assess or comment on liabilities across Northern Ireland as a whole.
The report states: “We recommend that DFP regularly provides the Executive, the Assembly, and its Statutory Committees with more transparent, robust and comprehensive analysis of current and future Reinvestment and Reform Initiative (RRI) borrowings and PPP/PFI and Revenue Funding commitments.”
NIAO recommends “departments regularly provide the Assembly and its Statutory Committees with more transparent, robust and comprehensive analysis of all long-term commitments and liabilities and their impact on departmental budgets.”