LANCASHIRE taxpayers will hand over a staggering £1.5billion in interest payments to private firms in exchange for its schools, hospitals and fire stations, it can be revealed.

A Lancashire Telegraph investigation has uncovered the “scary” interest payments to be made under controversial private finance initiative (PFI) contracts over future years.

Opposition politicians have called for a review of the “fat cat contracts” and say Lancashire taxpayers are being “ripped off” because the work could have been done far cheaper using other methods.

Bosses admit council tax rises will be inevitable to fund the repayments, which have been branded a “terrifying, hidden debt”.

The interest fees include:

  • £400million for an Australian firm to dispose of Lancashire’s waste in a £2billion, 25-year deal.
  • £200million for the first three phases of the county’s Building Schools for the Future project.
  • An estimated £680million for the Royal Blackburn Hospital.

Labour MPs have claimed the deals are the only way to fund major public projects.

But County Hall Tory leader Geoff Driver said PFI was a “ruse to get things off the balance sheet”.

He added: “Small print in contracts will never be able to cover the fact that the public sector is being ripped off.”

And Lib Dem boss David Whipp called for a review of PFI contracts given the looming recession.

He said: “The banks have been bailed out, surely we could say let’s have a look at these fat cat contracts and try and get a better deal for the public.”

Coun Whipp added: “I am shocked at the figure of £1.5billion.

"They are bleeding us dry and we are being ripped off left right and centre.

“Year on year we will be locked into these massive payments. It’s a massive con.”

Mark Wallace, of the Taxpayers’ Alliance, said: “Terrifyingly, PFI debts aren’t even counted by the government as part of the national debt.

"We’ve got a huge, hidden liability that’s coming back to bite us.”

The payments for the Building Schools for the Future programme will increase once the remaining phases are agreed.

As well as Royal Blackburn hospital, which cost just £113million to build, bosses are facing interest payments of about £180million for Burnley General Hospital's Phase Five extension.

Under PFI, capital projects are typically built, financed and managed by a private sector consortium, under a contract for about 30 years.

It was introduced by John Major in 1992 but its usage has increased under Labour.

Supporters say it avoids making large one-off payments which would spark tax rises, and transfers the risk away from taxpayers.

But it has been controversial, with critics saying it does not provide good value for money.

Hyndburn MP Greg Pope said: “There are clear downsides to PFIs, but on the other hand we have a brand new hospital.

“It’s a bit like buying a house - very few people can afford to buy one outright and these are phenomenally expensive items.”

Lancashire County Council’s cabinet member for resources, Coun Tony Martin, said: “At the time PFI was the only show in town.

"The idea was to keep public sector borrowing down, but that’s all gone out of the window now.

“I would have preferred traditional borrowing. It’s a bureaucratic nightmare but it’s the only way to get all this infrastructure work done.

“The scary one for us is the cost of the waste PFI, which will mean significant increases in council tax in 2011/12.”

The £1.5billion total will increase further when the multimillion pound contract to build four new fire stations in Lancashire is finalised.

New fire stations in Blackburn, Burnley, Chorley and Fleetwood will cost £12miilion to build, with total payments over 25 years of about £52million.

PFI payments are also being made for the building of stations in Hyndburn and Morecambe, on a £21.4million 30-year contract signed in 2003.

Responding to our Freedom of Information Act request, Lancashire County Council also revealed interest payments of £12million would be made for Fleetwood High School, which cost just £10.6million to build.

Hyndburn, Pendle, Burnley, Rossendale and Ribble Valley councils all said they were not involved in an PFI schemes.

Blackburn with Darwen council is expected to sign up to PFI schemes for future projects - with its own waste disposal strategy a likely contender - but is not in any at the moment.