Treasury defends PFI research from critics

25 April 2007
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26 April 2007 | Paul Snell

The Treasury has maintained its evidence that the Private Finance Initiative (PFI) is superior to conventional procurement is not flawed.

The reaction comes after a report published by a number of leading academics described the evidence as "highly misleading".

The study by three academics at the Centre for International Public Health Policy (CIPHP) said there were "fundamental flaws" in analysis by the Treasury that PFI projects reduce cost and time overruns.

But the department defended its analysis. It said in a statement: "The independent National Audit Office (NAO), not the Treasury, reported on the effectiveness of PFI projects, and it is they who state that PFI gives 'greater certainty'."

Yet the CIPHP studied two reports on PFI projects produced by the NAO and found neither "compared performance under different procurement routes". Only one of the five studies the Treasury used as justification for the success of PFI compared the two. Yet CIPHP said it contained "clear evidence of selection bias" - comparing projects under much different conditions.

Alyson Pollock, head of the CIPHP, said: "It would appear that comparisons are rigged in favour of PFI and that Treasury policy is not evidence-based."

Another report, published this month by credit rating firm Standard & Poor's, revealed 91 per cent of firms involved in public-private partnerships (PPPs) believed they were more effective at delivering construction projects than conventional procurement approaches.

It said, however, the superiority of PPPs was dependent on a number of factors, primarily the quality of project management and leadership skills.

SMapr2007

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