Delivering a better service or storing up a new Enron?

There can be few subjects quite as dry as the public finances but that has not stopped the Private Finance Initiative from being at the centre of controversy since it was first unveiled a decade ago by the then Chancellor, Kenneth Clarke.

Supporters of the PFI argue it enables public investment that would not otherwise take place to go ahead – in schools, prisons, hospitals, roads, railways and the like. Moreover, it allows that investment to be kept off-balance sheet, enabling the Government to stick to self-imposed golden rules on fiscal restraint.

Funding public procurement projects through the private sector may be more expensive. But, argue PFI proponents, this is more than compensated for by the greater efficiency the private sector brings to bear and the amount of risk transferred to its shoulders.

The opponents of PFI, and there are just as many, dismiss it as government spending on the "never-never", at best a way of buying public services on tick, at worst an Enron-style fraud on the public finances which will come back to bite future governments.

They claim there is no evidence that PFI provides value for money, nor that it successfully transfers risk to the private sector. What happens, for instance, if a PFI hospital fails? Does it close or, more likely, does the liability simply fall back on to the taxpayer?

The trade unions also argue that PFI means inferior terms and conditions for employees.