PFI revelations: Top economist ‘worried’ about NI finances
A top economist says he is ‘worried’ by attempts to balance NI’s books, after the News Letter revealed Stormont has failed to create a strategic programme for reviewing its massive Private Finance Initiative debt.
Over five years ago the NI Audit Office put special responsibilty on the Office of First and Deputy First Minister (OFMDFM), now The Executive Office (TEO), to lead other Stormont departments in regular detailed reviews of all existing Private Finance Initiatives (PFI) in a bid to make savings on the total £6.8bn debt.
However, yesterday the News Letter confirmed that almost nothing had been done to comply with the Audit Office requirements since it made them in January 2014. England and Wales put a similar review strategy in place in 2010 by comparison.
The total cost of all Northern Ireland’s PFI contracts when paid off will be £6.8bn – almost four times the initial £1.73bn construction cost paid by the private investors - to whom the taxpayer is still making massive repayments. These amounted to £264m this year, with annual payments having jumped up by £18m a year between 2014 and 2018.
Leading NI economist Dr Esmond Birnie noted that although OFMDFM did provide a certain amount of data in 2015 on PFIs, this was not done in a very user friendly style, “nor is there much or any data” on the cost savings produced through PFI. He accepted departmental claims that the suspension of the assembly in 2017 makes it difficult to file regular PFI efficiency reviews, but added that “we might reasonably have expected more progress to be made” up until the end of devolution.
“As an economist who is concerned by the question of how NI balances its books in public finance terms there are several questions which trouble me,” he added.
The first was how much money the NI public sector owes - not just the £6.8n for PFI but also the £2bn plus borrowed through the Reform and Reinvestment Initiative, plus debt of other parts of the NI public sector.
It was good that departments have some data but it is still “very difficult to work out what is the total level of debt being carried by NI government”.
This includes all private public partnerships and borrowing by various public agencies, such as the Housing Executive, he said.
“Why am I interested - worried! - about that? Well, it is a question of long run sustainability - how big are the annual interest charges and what is the burden we are placing on future generations?”
OFMDFM’s successor, TEO, declined to respond to Mr Birnie.
In 2014 the Audit Office also tasked the Department of Finance (DoF) to regularly provide MLAs with “more transparent, robust and comprehensive analysis of current and future PFI commitments, as well as other borrowings”. DoF responded that it published some PFI data in the 2016/17 budget; that other borrowings are laid in the Assembly and online annually, and that NI’s PFIs are in the UK-wide list. DoF has only one PFI project, it says, online access to Land Registry, which has seen £1.9m savings in the latest two years.