The days of the public sector being a pushover in contracts must end, says Hammond © PA Images
The days of the public sector being a pushover in contracts must end, says Hammond © PA Images

'Centre of best practice' to support PFI contract managers

Will Green is news editor of Supply Management
29 October 2018

Chancellor Philip Hammond has announced the establishment of a “centre of best practice” to manage private finance initiative (PFI) contracts.

The centre will be set up in the Department of Health and Social Care to “support contract managers at a number of NHS trusts”.

Hammond said new PFI deals, in which private sector cash is used to build infrastructure that is then leased back to the public sector, would be abolished but the government would not be “triggering ruinous penalty clauses” by cancelling existing contracts.

“We will honour existing contracts but the days of the public sector being a pushover must end,” he said.

“Instead we will establish a centre of excellence to manage these contracts, starting in the health sector.”

He added: “I have not signed off a PFI contract and I never will.”

Hammond announced £1.6bn of new investment for R&D, with additional funding for the government’s industrial strategy. Whitehall departmental spending will increase on average by 1.2% from 2019.

English local authorities will receive an extra £650m of grant funding for social care.

Budget documents said by 2021 the government would be investing £9bn a year more in infrastructure than in 2015. Local authorities will be allocated £420m in 2018-19 to tackle potholes and repair damaged roads and bridges.

Hammond announced an extra £400m of spending for schools, equating to on average £10,000 per primary school and £50,000 per secondary.

The Ministry of Defence will get an extra £1bn over this year and next year and there will be £160m for counter terrorism in 2019-20. A mental health crisis service, including a 24-hour telephone hotline, will be established alongside extra investment in the NHS.

Hammond said a new plastic tax would be introduced for packaging containing less than 30% recycled plastic but they would consult on the timetable.

Fuel duty will be frozen for the ninth year in a row.

“The era of austerity is finally coming to an end,” said Hammond.

He announced an extra £500m for Brexit contingency planning. “We are at a pivotal moment in our EU negotiations. The stakes could not be higher,” he said. Hammond said the government was “confident but not complacent of achieving a deal”.

Hammond said the spring budget statement could be “upgraded to a full fiscal event” if things change.

Government borrowing is expected to be £31.8bn in 2019-20, falling to £19.8bn in 2023-24. The deficit as a proportion of GDP is projected to be 1.4% next year, dropping to 0.8% in 2023-24.

The economy is expected to grow by 1.6% in 2019, 1.4% in 2020 and 2021, 1.5% in 2022 and 1.6% in 2023.

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