Headlines: January 16th, 2003

Claims by Ministers that the Public Finance Initiative gives better value for money, improved design innovation and better risk management than traditional funding have been challenged by the Audit Commission. Auditors looked at PFI funded schools opened up to September 2001 and compared them with a traditionally funded sample. PFI schools came out worse on a range of measures.The quality of school buildings built via more traditional means was better than the early PFI schools. There was little evidence of design innovation and some school users were critical of important design aspects such as classroom size and layout compared with non-PFI schools. Unit costs varied widely, with no clear-cut difference between PFI and traditional schools in either construction or running costs. Cleaning costs appeared to be higher in PFI schools, probably reflecting higher standards. Risk has been reallocated, but important features and risks have sometimes been left out of project specifications. The early PFI schools were not delivered any quicker than non-PFI schools.

The Commission accepts that skills in negotiating PFI contracts have improved since the early projects were launched and urges that its report should be used for drawing lessons, rather than debating the overall concept of PFI. It believes that learning from experience should strengthen the skills of PFI procurers and improve providers ‘ understanding of client needs. This should lead to faster delivery, lower costs and more tightly defined specifications.

Recommendations in the report include the inclusion of school users in the detailed design stage, and allowing high-performing authorities the licence to explore other options to PFI procurement.

The GMB union claims that its criticisms of PFI as a poor deal for the taxpayer have been fully justified by this report. The DfEE considers the report to present a historical perspective that does not reflect PFI contracts that are being signed currently.

Link: http://www.audit-commission.gov.uk