Sir Keir Starmer’s private finance plans bear similarities to Tony Blair’s use of private finance when he came to powerIndustry insiders have warned such measures could lead to an expansion of toll roads and extra charges on customers’ bills.Under PFI contracts, the private sector financed, built and operated infrastructure that was paid back over time by taxpayers.
The party’s manifesto indicates private finance could be used to pay for roads, railways, reservoirs, energy sources and other “nationally significant” infrastructure.some of the details of Labour’s pledges have not been fleshed out – but in principle mean the government take on a greater proportion of the risk in projects that are jointly funded with the private sector.
Hannah Vickers, chief of staff at Mace, a consultancy and construction firm that will advise on a Labour-led review of major infrastructure projects, toldShe said the risk for the Government is if it sets a minimum price that is too low, no firm will be interested. Too high and it could be expensive for taxpayers.
Mr Thomas said one of the challenges of building essential public infrastructure with private finance is that the Government does not have the same level of contracts expertise as in the private sector. "We signed up to really bad deals," he said. Alex Chapman, senior economist at the New Economics Foundation, warned that “a lot has been tried and failed over the past two decades”.
“Any large-scale infrastructure project that enables you to take that cost off your balance sheet is bad because it just leads to this situation where nobody’s watching you," he warned. "There’s not enough accountability." “Often projects that are attracting private finance will cost you more over time," he said. "But it’s a mechanism of enabling them to proceed at a quicker pace. So you realise the benefits earlier because you’re not dependent on public funding only, which is limited."“With finance, you need to pay it back,” he said.
Mr de Cani said tolls on roads can be difficult to sell to the public, so aligning them with environmental goals can make them more appealing. Under the terms of the deal Transport for London agreed to pay the company – a group of firms that came together to deliver the project – for the ability to operate its train on the railway. TfL retained control of fares charged to the public and the operation of the transport network.