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Private finance f lak hitting wrong targets


CONTRACTORS and their partners in PFI consortia are coming under fire again for daring to make money through hospital building.

The usual array of union leaders and Luddite health campaigners have been lining up to attack the Government's announcement that six new hospitals worth £1.5 billion will be built using the private finance model.

But what exactly is their alternative to the system that has been responsible for £46 billionworth of schemes either completed or planned across the health, education and transport sectors since Labour came to power?

The simple truth is that PFI has become the only game in town when it comes to major public projects and, without private funding, new hospitals would not get built.

There is no doubt the private sector has come to the rescue of Government building plans but of course there is a price to pay when you deal with the commercial world.

Major contractors answer to their shareholders, who demand a decent return on investment so it shouldn't come as a shock when they make the most of that opportunity.

Opponents of PFI say it saddles the public sector with expensive financial commitments for decades to come while consortia overcharge for maintenance agreements.

Contractors have also come under fire for refinancing debts at lower interest rates once the buildings are up and running.

That is not their fault - they are just using the financial markets to make a better return and, if the initial deal did not have a clawback clause, then the finger of blame should be pointed at the civil servant who drew it up.