Tory use of PFI slammed by NAO and, er, Tories

May 14, 2011

A new report by the National Audit Office (NAO) has slammed PFI yet again, as evidence against the scheme continues to mount.

A top-line of the report said that total costs for PFI have risen between 20 and 33% since the start of the 2008 financial crisis, battering the economic case for the scheme even further.

As the cost of borrowing has risen dramatically, taxpayers have been forced to pay up to a third more for exactly the same product, at a time when they can least afford it. Diplomatically, the report said: “The NAO concludes that, in the current climate, the use of private finance may not be as suitable for as many projects as it has been in the past”.

The report urged government to establish an alternative method of public procurement: “The NAO calls on the Treasury and departments to identify alternative methods for delivering infrastructure and related facilities services, building on the lessons learned from PFI, to maximise value for money for government.”

This comes as a major embarrassment to the government because Chancellor George Osborne is soon due to sign off the most PFI projects in any year since the economic crisis.

Resistance to PFI from within his own party appears to be growing. Richard Bacon, a Tory member of the public accounts committee, said: “This report should be required reading for senior civil servants whenever a government department even hints that it may wish to use the private finance initiative.”

Bacon is a signatory of the PFI rebate campaign, which calls for the private sector to reimburse the public purse by £500 million. Political will within the Conservative party appears divided, as many others seem unconvinced by PFI. A further 60 Tory MPs have put their name to the PFI rebate petition (see the sidebar of the campaign homepage for details) in contrast to just six Lib-Dems and one Labour MP.

Like previous reports, the NAO also commented on the lack of data available within departments from which to judge the performance of PFI comprehensively. It criticised the Treasury for not managing information adequately and for its failure, over some 19 years, to produce “a truly robust and systematic evaluation” of whether PFI offered value for money.

It is a theme consistent over the last three reports on PFI; a lack of centralised data has prohibited a full evaluation of PFI’s performance. Here’s the Economic Affairs Committee’s verdict in 2009: “A dearth of hard data, especially on comparable projects subject to conventional procurement, encourages assertion rather than analysis. This needs to be remedied”. And here is the NAO in January: “A lack of good quality central data undermines the Departments’ ability to monitor performance, to drive efficiency savings and effectiveness improvements”.

As we blogged previously, many details of PFI are difficult to access but the fragmentary pieces of data we do have highlight the gross inefficiency of the scheme.

We are trying to combat this using the Freedom of Information Act (update coming soon) but, as evidenced, it has been difficult because the government itself has failed to store and use information on PFI effectively.

One solution would be a public inquiry that audits the public debt incurred by PFI projects. Globalise Resistance is currently considering the feasibility of making a proposal and will be consulting with academics and other campaigns groups in the coming weeks.

  • Print
  • Digg
  • Facebook
  • Google Bookmarks
  • email
  • PDF
  • RSS
  • Twitter

Comments are closed.