Some interesting comments regarding FSTA here:
Coming back to haunt him: the billions in debt that Brown thought he'd buried. The Independant 24 Feb 08
The Government's reputation for prudence has been battered and pummelled by economic blow after economic blow ever since Gordon Brown left No 11. But it is a fiddle from his past as Chancellor that might yet deliver the knockout punch.
Next month the Treasury will be forced to overturn the great accounting scam that Mr Brown himself championed. The Prime Minister's fiercest critics argue that he has hidden more than £30bn of debt, which future generations will then be burdened with paying off.
The big attraction of the PFI has been to get spending off the Government's balance sheet. The capital value of the 621 contracts signed under the initiative is £56.9bn, yet only 42.4 per cent of this debt has made it on to the Government's books. The £32.5bn that has not been accounted for represents a staggering 541 projects.
In itself, all this is not proof of a scam. Some projects have such significant risk and control transferred to the private sector that those companies, rather than the Government, should indeed account for the project.
However, the Government has often gone to extraordinary lengths to ensure that it has transferred the risk. For example, AirTanker, the consortium set up to run the Government's £13bn mid-air refuelling programme, has been given ownership of the 14 aircraft in the scheme. This means that its shareholders, which include EADS and Rolls-Royce, will keep assets paid for by taxation when the 27-year contract ends. During that contract, AirTanker will also be free to hire out those assets for commercial gain. Yet insiders say the consortium itself never deman-ded sweeteners.
In the next few weeks the Treasury, the Office for National Statistics (ONS) and Frab will agree to a new PFI accounting guideline, making it more difficult for departments to use the PFI simply as a driver to get those hospitals and schools off their books.
Most pundits have assumed that this will automatically mean that most or even all of the £56.9bn will be treated as on-balance sheet. But many projects would undoubtedly remain on the private sector's books as it bears the brunt of the risk – a Ministry of Defence source confirms that AirTanker would never end up on its budget – and there is no guarantee that the Government will reassess the schemes that are already built and operational.