PFI debts 'stem from badly drawn up contracts'
Probe into first PFI schools finds skills shortage
Government urged to ditch PFI for schools
MPs say too much profit suggests poor value on PFI
PFI deals remain over-budget and slow
18 January 2011 |
should re-evaluate the use of the private finance initiative (PFI) for
procurement of building programmes in the NHS and local government, according
to an influential group of MPs.
A report by the Committee
of Public Accounts (PAC) said there was no clear evidence to conclude whether
PFI has been better or worse value for money for housing and hospitals than
other procurement options.
The MP Margaret
Hodge, PAC chair said: “Local authorities and health trusts used PFI because
there was no realistic alternative, not because it represented best value for
“The use of PFI and its alternatives should now be robustly evaluated. Looking
back at PFI procurements, the government should also do more to find out where
and why PFI works best and capture the lessons. Departments should also do more
to ensure they get the best out of existing PFI contracts.”
PFI housing contracts have
cost considerably more than originally planned and, on average, have been let
two and a half years late.
Meanwhile, the Department of
Health was not using its own buying power to leverage gains for the taxpayer
because it failed to negotiate with investment funds centrally.
together large numbers of PFI projects, private sector investors may use the
consequent economies of scale to drive up the value of their interests and
generate bigger profits,” Hodge said. “We are concerned that the benefits
arising from these economies of scale are not being shared by the taxpayer. At
a time when public finances are so tight, government must use the weight of its
buying power to negotiate with major PFI investors and contractors a better
deal for the taxpayer.”
As of April
2009 there were 76 operational PFI hospital contracts with a capital value of
£6 billion. For housing projects, including those currently in procurement,
there is £2.8 billion capital raised through the system.