As we have seen, one major criticism of the value for money is the fiddling of the capital costs. But there are two further disadvantages. One is a confusion of responsibilities for maintenance. As a recent Public Accounts Committee report pointed out, even when a PFI company is not itself carrying out a change to a project, it frequently charges a fee for simply acting as a conduit (see chapter 7). These fees have added on from 2% to 25% to the cost of the change.
The second further problem with PFI contracts is the cost of negotiating them. As Jon Sussex has pointed out, the PFI is unpopular with health service managers because of the larger transactions costs that are entailed compared with conventional procurement. Thus at the NNUH, the PFI set-up costs totalled about £32 mn., about a fifth of the £159 mn construction cost of the hospital.
These costs are not generally included in value for money comparisons.
The transactions costs can be reduced by reducing competition and by standardising procedures, but a reduction in competition is likely to lead to an increase in cost tenders while the standardisation has been criticised for its loss of flexibility and innovation.