Watchdogs reject probe into PFI value for money

2 January 2003
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02 January 2003 | Robin Parker

Government procurement advisers have dismissed calls for a sweeping review of the controversial private finance initiative (PFI).

The Institute for Public Policy Research (IPPR), a left-leaning think-tank, has discovered that spending watchdogs examined only 6 per cent of the 378 completed PFI projects for their value for money.

According to the IPPR report, PFI's value for money varied massively in different areas of public-sector procurement.

While road, defence and prison projects had saved up to 31 per cent compared with conventional procurement, no school or hospital PFI deals had saved more than 10 per cent.

It said PFI had only been examined for the construction or delivery of projects and that no review has yet proved whether the scheme delivers expected benefits when up and running.

But an Office of Government Commerce spokesman said that proportionately more PFI deals are reviewed than other projects.

A National Audit Office (NAO) spokesman said: "We decide which ones to evaluate based on their individual merits.

"The taxpayer would not have value for money if we audited every deal."

The IPPR report came as London Underground, which is to be run as a public-private partnership, admitted that changes to contracts have pushed up bid prices by £300 million.

A series of reviews of PFI projects is due from the Audit Commission and the NAO in the New Year, including schools and the Treasury building, and 33 PFI construction deals.

The issue continues to divide purchasers. In the current SM online poll, which asks whether PFI is the best option for public infrastructure projects, 44 per cent of purchasers agree and 47 per cent disagree so far.

l To add your vote in our poll, visit www.supplymanagement.com. For more details of the IPPR report, click on to www.ippr.org.uk

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