31 January 2008
Changes to PFI projects should not be costing taxpayers "an arm and a leg", says an influential MP.
Conservative Edward Leigh, who chairs the Public Accounts Committee, was responding to a report published this month by the National Audit Office (NAO) on the cost of making alterations to PFI projects.
The report revealed that in 2006 the public sector spent £180 million on changes, and said they often represented poor value for money. Costs varied significantly between projects. The average cost of fitting an electrical socket was £119, but rose as high as £302 in one case. In some projects there was no charge for fitting a notice board, while in another it cost nearly £150. These minor alterations were also expensive when compared with industry averages.
"Nothing in today's report causes me to revise my view that public sector contract managers for PFI deals have insufficient commercial expertise to negotiate with, and develop effective relationships with, their private sector counterparts," he said.
While most contract managers were satisfied with the changes that were made, the report added that poor contract management and insufficient resources often damaged value for money. Contract managers told the NAO there was a "trade-off" between challenging the cost of minor changes and avoiding delays. The cost of small changes was often not checked as there were too many, or the low values could not justify the time it would take. The NAO recommended buyers implement "consistent and robust means" to validate cost changes.
Neil Bentley, director of public services at the CBI, said: "It is vital the public sector develops its professional skills so it can take advantage of this and help improve service delivery once projects are operational."
A Treasury spokesman said: "We welcome the endorsement of recent Treasury guidance, which will help to ensure full value for money is obtained when changes are made, for new and existing contracts."