Ministers 'must do better on PFI'

http://news.bbc.co.uk/go/rss/-/1/hi/uk_politics/7592179.stm

Version 0 of 1.

The government must do more to ensure deals between the public and private sectors provide good value for money, MPs have said.

The Commons public accounts committee said many authorities were "not doing a good job" of managing Public Financial Initiative (PFI) contracts.

Managers often lacked business expertise, while changes to the system in 2006 had cost £180m, it added.

But the government insisted that PFI represented "value for money".

Under the system, public bodies enter into long-term contracts with private firms to design, build and operate assets such as hospitals or schools.

'Under-resourced'

There are now more than 500 projects with a combined capital value of £57bn, according to the committee.

It said more than 15% of the projects were not being managed on a full-time basis.

A third of contract managers at PFI hospitals and a sixth of contract managers of PFI schools have described their teams as under-resourced, the committee claimed.

Only if services are taken out of the hands of politicians and bureaucrats entirely, and control handed back to civil society, will this waste really come to an end Matthew Sinclair, Taxpayers' Alliance

Its chairman, Conservative MP Edward Leigh, said: "The evidence is that many public sector authorities are not doing a good job of managing operational PFI deals.

"Many contract managers do not have enough commercial expertise and the management of the contract is frequently not sufficiently resourced."

He added: "Public sector authorities must keep the incumbent private sector contractors on their toes by, wherever appropriate, making proposed changes costing over £100,000 subject to competition."

The committee also called for the removal of management fees after it emerged that separate "go-between" companies cost an estimated £6m a year.

'Spurious reasons'

Conservative MP Richard Bacon, a member of the committee, said PFI schools and hospitals which wanted to make changes were being "fleeced" by management fees.

He said: "The fees rarely have any relation to the work involved and are often levied for spurious reasons. This is exactly the kind of behaviour that makes people cynical about PFI projects.

"The Treasury needs to make sure that the public sector is following its guidance on management fees to the letter."

Matthew Sinclair, policy analyst at Taxpayers' Alliance, said: "Officials often lack the expertise and experience needed to manage complex capital procurement, and that can be most telling when changes need to be made to the specifications.

"Only if services are taken out of the hands of politicians and bureaucrats entirely, and control handed back to civil society, will this waste really come to an end."

But a Treasury spokesman said: "The government will continue to support PFI as part of its strategy to deliver high quality public services, alongside other procurement routes, where it demonstrates value for money.

"PFI can deliver better infrastructure, faster and on budget, and keep that infrastructure up to a high standard throughout its life.

He said the Treasury would respond fully to the committee's conclusions and recommendations at a later date.