I wish to comment on the letter from M J Warner (EA, May 5). Where I beg to differ with M J Warner is with the Government's obsession with the Private Finance Initiative.

I can see no reason why contracts for the construction of hospitals, schools etc, are not carried out as they were in "the old days" by public, rather than private borrowing. This is, in fact, a cheaper way of borrowing. The rest of the procedure was exactly the same, with contract documents prepared by consultants, competitive tenders invited from contractors of known expertise and resources, and penalty clauses included in the contract if the work is not completed within the Contract Period.

Under the old system, the cost of an over-running contract was borne by the contractor and no extra cost fell on the public purse unlike, for example, the tube line extension, which was hugely overspent and the taxpayers picked up the bill).

As your correspondent rightly says, the PFI is like a mortgage. What he does not say is that, upon completion the new building is owned by the contractors and leased to the users with all profits going to the company's shareholders. When you buy a house on a mortgage, you own the property from the moment when contracts are exchanged.

G T HEATH

Shaw