Hidden debt piles up on prestige projects
The cost of building schools, homes and installing street lights in the West Midlands will run to almost £2 billion - four times their value - it was revealed today.
The cost of building schools, homes and installing street lights in the West Midlands will run to almost £2 billion - four times their value - it was revealed today.
Just days after it was revealed new hospitals built under the private finance initiative will cost taxpayers many times more than they are worth, the Express & Star has learned the true cost of other schemes being built by councils. PFI works like a mortgage, in which a council pays for a scheme by using private funds and pays back the money over a number of years.
Critics say the scheme is just hidden debt because it keeps the cost off the councils' accounts despite annual payments running to millions of pounds.
One scheme built on PFI was Wolverhampton Swimming and Fitness Centre, opened in 2006 at Wednesfield with a value of £13m and run by DC Leisure under contract from the city council.
By the time the council has finished paying for it in 2035 it will have cost almost £38m.
Finance chief Councillor Wendy Thompson, a mem-ber of the Tory cabinet which inherited the centre from Labour, said: "PFIs are just hidden debt - that's why the government encouraged it so much."
Street lighting in Staff-ordshire worth £31m will cost £330m to pay off.
Councillor Philip Atkins, Tory leader of the county council, said: "The street lighting and children's home PFIs would have been required to pass a value-for-money test at the time they were embarked upon by the previous administration."
Sandwell's £61m Haw-thorn Fields development, of 1,200 homes will cost the Labour authority £200m by the time it is paid off in 2031.
Councillor Steve Eling, deputy leader, said: "There is absolutely no difference to taking out a mortgage to buy a house or to finance buildings for council use."
PFI contributed to the refurbishment and building of schools in Birmingham, but the final costs will be 10 times the value.
Councillor Les Lawrence, Tory cabinet member for children, young people and families, said: "PFI provides a solution to getting major projects off the ground."
An overhaul of Dudley school computers was worth £32m in 2000, but the cost is now £50m. St Thomas More School, Walsall, is worth £8m, but by the time it's paid for it will cost £57m.
Local Government Editor Daniel Wainwright
