PFI debt to bail out banks
The UK Government has confirmed it is using PFI debts to help bail out the banks.
Jamie Hepburn, SNP MSP for Central Scotland, has expressed his amazement at a Treasury statement that it will not negotiate better terms for repaying PFI debt with banks which it owns as it would damage Treasury shareholdings.
The Treasury also confirmed that PFI repayments for the next 25 years come to £216 billion – a figure disputed when the SNP revealed it following the pre-budget report.
Responding to a letter from Mr Hepburn Treasury official James Dunstan told Mr Hepburn:
“The Government’s investments are managed on a commercial basis by a new arm’s-length company, ‘UK Financial Instruments Limited’ (UKFI), which is wholly owned by the Government. Its overarching objectives are to protect and create value for the taxpayer as shareholder, with due regard to financial stability and acting in a way that promotes competition…
“For these reasons HM Treasury would not wish to compel improved terms for PFI/PPP payments from the recapitalised banks”.
Commenting, Jamie Hepburn MSP said:
“It sounds as if the UK Government is robbing Peter to pay Paul, and taxpayers in Scotland are being ripped-off twice over.
“Not only are taxpayers funding billion-pound bail-outs for the banks with few guarantees in return they are paying these same banks even more billions in PFI debts – and it seems that the UK Government not only thinks this makes sense, but that it is a good thing.
“Taxpayers money is propping up the share price in more ways than one.
“In these extraordinary economic times, a bit of common sense should prevail, and the Government should start negotiating better terms for the PFI debts held by banks in which it is now a shareholder.”
SNP MP and Treasury Spokesman Stewart Hosie noted the Treasury’s confirmation in its letter to Mr Hepburn that there is a £216 billion bill for PFI projects
“When the SNP revealed the cost of PFI was £216 billion the Treasury told us we were wrong. Now their own officials are accepting this figure as the cost of PFI for the next 25 years and it seems there is billions of more debt soon to be added to that bill.”