Posted by: tonygurney | February 7, 2011

Economists say councils face PFI cash time-bomb – Herald Scotland

Local authorities in Scotland face a financial time-bomb on PFI projects for schools because of a series of flawed assumptions made when they entered into contracts, according to a new analysis by independent experts.

Gaps towards the end of some long contracts when central government funding runs out, over-optimism on associated land sales, and an ???astounding??? failure to allow for inflation being higher than predicted, are all contributing to the grim picture.

One unnamed local authority has already decided to raise future council tax by 1% annually for 12 years just to honour the PFI contract entered into.

Economists Margaret and Jim Cuthbert, who made extensive use of Freedom of Information requests to gather their data, say that five councils only made private finance deals viable by building specific increases into council tax to fund them.

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