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A high-powered committee of MPs has attacked the government鈥檚 鈥渆xtremely inefficient鈥� use of PFI funding and called on it to stall procurement of a 拢450m PFI hospital in Liverpool.

The Treasury Select Committee branded the model 鈥減oor value for money鈥� in a report published following its inquiry into PFI in July.

The MPs also called on the coalition to stall procurement of the Royal Liverpool hospital to run the rule over its costs.

Carillion and Interserve were last month named as the final two bidders on the scheme, which has been used as a case study in the MPs鈥� report.

The report also highlighted soaring borrowing costs, with the average cost of capital for low risk PFI projects standing at 8% - double the rate of government borrowing.

Analysis contained in the report suggests paying off PFI debt of 拢1bn could cost taxpayers the equivalent of paying off direct government debt of 拢1.7bn.

The report concluded: 鈥淲e believe that a financial model that routinely finds in favour of the PFI route, after the significant increases in finance costs in the wake of the financial crisis is unlikely to be fundamentally sound.鈥�

鈥淲e do not believe that PFI can be relied upon to provide good value for money without substantial reform.鈥�

Andrew Tyrie, the Tory MP who chairs the committee, said: 鈥淧FI means getting something now and paying later. Any Whitehall department could be excused for becoming addicted to that.

鈥淲e cannot carry on as were are, expecting the next generation of taxpayers to pick up the tab. PFI should only be used where we can show clear benefits for the taxpayer.鈥�

But the CBI defended the use of PFI, saying it was 鈥渁bsolutely essential鈥� for continued investment in public building projects.

Dr Neil Bentley, CBI deputy director-general, said:鈥漈he Committee鈥檚 report is right to say lessons from the past need to be heeded, and PFI must only be used when it is appropriate and offers the best value for money.

鈥淏ut with the state of the public finances, it is absolutely essential we attract the billions of pounds of private finance needed to upgrade our national infrastructure and boost jobs and growth.

鈥淭o do this, investors need confidence, and the Government must decide sooner rather than later how PFI will evolve, alongside a range of alternatives, such as Tax Increment Funding and Pension Fund Financing.

鈥淚t鈥檚 worth remembering that without PFI we would not have seen hundreds of much-needed hospitals, schools and homes delivered on time and within budget.鈥�