Private finance initiatives (PFI) used to fund the building of hospitals and other major infrastructure projects do not provide taxpayers with value for money and the long term contracts impose inflexible conditions, says a report from English MPs.

PFIs seemed attractive to government departments because the capital upfront costs are covered by the private sector and do not have to be included in departmental budgets.

But MPs on the Treasury Select Committee, a group that looks at public spending, are concerned that this incentive has caused departments to make poor investment decisions. The committee found that the debt to the taxpayer on a £1.7bn (€1.9bn; $2.8bn) publically funded project was similar to that of a £1bn PFI investment over the same period.

Andrew Tyrie MP, chairman of the committee, said, “PFIs should be brought on balance sheet and we must also impose much more robust criteria on projects that …