TREASURY officials are running £100 billion of off-balance-sheet liabilities with scant knowledge of financial markets, potentially costing taxpayers millions of pounds, bankers claim.

As a result, Gordon Brown is facing calls from both inside and outside his department to establish a central team to manage off-balance-sheet risks and reduce the Government’s interest bill.

The liabilities — which largely take the form of Private Finance Initiative (PFI) contracts to build hospitals, prisons and schools — have been run up by government departments, such as health, transport and defence, without any central co-ordination.

Bankers allege that civil servants’ lack of expertise in managing financial risk is adding to the burden on taxpayers because they are failing to raise funds at the cheapest rates.

Rising contingent liabilities, such as the £21 billion of funding for Network Rail, are exacerbating the problem. The creation of foundation hospitals is likely to add to the burden.

A senior banker, who declined to be named, said: “The public sector remains the major risk-taker in relation to interest rates. Yet it has delegated responsibility to manage this to the private sector while imposing no incentive for this to be done in the taxpayers’ interest.”

He added: “No private corporation would run its Treasury department in this way.”

Howard Flight, Shadow Chief Secretary to the Treasury, said: “However you look at it, the Government is building up at least £100 billion of off-balance-sheet liabilities and they seem to be increasing.”

In a sign that the Treasury has already acknowledged the need to keep tighter control of PFI projects, it has taken back responsibility for PFI policy from the Office of Government Commerce (OGC). PFI policy is now controlled by the Private Finance Unit, a Treasury grouping headed by Geoffrey Spence. Mr Spence is on secondment from Deutsche Bank’s project finance team for two years.

However, Partnerships UK, the agency set up to promote more Public Private Partnerships, remains autonomous from the Treasury, although it has a minority government shareholding.

The Debt Management Office, which manages gilts for the Treasury, is seen as the natural agency to manage interest rate risks. However, insiders say that there are no plans for the DMO to take on this responsibility. Privately, there are concerns that the DMO would have to recruit expensive experts from the private sector if its brief was widened, because its expertise in this area is limited.

A spokesman for the Treasury’s Private Finance Unit played down fears over the level of financing risk, pointing out that the OGC released new guidelines earlier this year, which banks involved in PFI must follow.

The spokesman said: “All of the costs of financing are reflected in PFI tenders. Those who can keep their costs down have a better chance of winning the contract.”

According to the Treasury’s Red Book there are £110 billion of outstanding PFI payments due between now and 2029. However, committed payments for this year are just £5.4 billion.

The spokesman said: “It is not accurate to add all the payments together. There is no accounting convention that would require us to show these payments as liabilities.”

The Red Book shows that payments will peak in 2007-08 at £6 billion, representing 1 per cent of total public spending.