2.34  Where services were previously delivered in-house, private finance can increase productivity and the quality of delivery through innovation in workforce practices. This might be because the private sector brings innovation in management practice, or because bringing in a new employer provides opportunity for change. Operators of PFI prisons encouraged more constructive prisoner-staff relationships which the Prison Service later used as best practice, and changed shift patterns to allow receptions to open later and visiting times to be more flexible.33

2.35  Achieving innovation in workforce practices is controversial, because there is the risk that it is at the expense of the employees. Government policy states "PFI has allowed for considerable innovation in workforce practices, but the value for money that PFI can delivery should not be achieved at the expense of staff terms and conditions".34 Employment regulations aim to protect terms and conditions of staff transferred between public and private employers. Employees' unions often argue that using private finance has been detrimental to staff without improving performance.35

2.36  There has been little robust analysis of this topic. The NAO surveyed 43 PFI schemes on staff terms and conditions in 2004.36 We found that terms and conditions were not necessarily worse in the private sector, with skilled and management roles paid more in the private sector, but the pay for the least skilled was marginally worse. We also found that these differences narrowed a few years into operation.

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33  The operational performance of PFI prisons, National Audit Office (HC 700, 2002-03).

34  PFI: meeting the investment challenge, HMT (2003). See also Value for money assessment guidance, HMT (2006).

35  For an example of UNISON's views, see Reclaiming the initiative: putting the public back into PFI, UNISON (2009); Overview of public private partnerships in the UK, UNISON (2005).

36  Protecting staff in PPP/PFI deals, National Audit Office (2008).