At the same time as a new official report out this week casts serious doubts on the Treasury’s handling of construction projects funded through Private Finance Initiatives – better known as PFI’s – the Fire Brigades Union has revealed some staggering figures regarding the ongoing costs of the doomed Fire Control project. You may recall this wholly unnecessary scheme devised by the old “New Labour” administration intended to consolidate the 49 regional fire and rescue services into 9 “super” regional control centre’s.
The Coalition axed it in January this year as technical difficulties mounted and implementation costs spiralled out of control. All 9 buildings were constructed but eight will likely never be used by the Fire and Rescue Services, with currently just the London site operational.
In my blog at the time it was axed I commented that with PFI contracts in place cancellation would have its own additional costs. Even so it comes as some surprise that the FBU claims a draw dropping £1.4 million of taxpayers’ money is haemorrhaging every month in rent for the unoccupied buildings, paid mainly to offshore property companies. Rent has been paid on the buildings since July 2007 and as Government is contractually tied into paying rent until the leases expire in 2033, the Union estimates the final cost at £340million in addition to the £140million spent before the axe fell.
No doubt the FBU has an axe to grind given that it is facing significant reductions in its operational budget as part of the public spending cuts but as much as I am sympathetic I can’t help but think it is crying over spilt milk.
If the FBU want a really good example of PFI waste set against the background of spending cuts look no further than the Princess Royal University Hospital in Bromley. This opened in 2003 and cost an estimated £118 million for building and fixtures. Published Treasury calculations show that the NHS will have paid out a total of £1.21 billion over the 35-year life of the PFI contract. PFI seems to me to be a smart ruse to spend money you don’t have today in the knowledge or hope that someone else can pick up the tab in the future.