7.32 These reforms will be introduced in a way that maximises flexibility for the public sector to manage the transition, ensuring that both allocations of PFI credits to Departments and investment plans by Local Authorities are not disrupted, and that current projects can continue to be delivered according to plan. Both reform of the PSC process and of the minimum value for PFI projects in each sector will take place in the context of the Spending Review. Specifically:
• HM Treasury will begin consultation with Departments and other stakeholders on where robust, minimum values should be set in each case to promote those projects where the public benefit is greatest; and
• on the basis of these discussions, new minimum values for PFI projects that receive Government funding will be rolled-out in the context of the next Spending Review.
7.33 At present, the great majority of small PFI schemes are sponsored by local authorities and funded through PFI credits allocated to central government Departments to pass on to local authorities as part of the Spending Review process. Any change in minimum values must respect the credit allocations to Departments made in the 2002 Spending Review and avoid any disruption to both current public investment plans and projects which are already in development.
7.34 While the appropriate minimum value of projects will vary from sector to sector, experience to date suggests that these values are likely to be above £20 million. For schemes below this level which do not benefit from initiatives which increase value for money by aggregating projects and streamline the procurement process (such as NHS LIFT), a range of other procurement routes are likely to be more appropriate.
7.35 The Government's policy is to use PFI only where it represents the best procurement option and as shown above, this is unlikely to be the case for projects with a small capital value. It is important then that local authorities have the flexibility to develop such projects through a wide range of procurement routes, choosing the most appropriate option that delivers the best value for the project. This flexibility is part of a wider commitment to devolve responsibility to local councils to meet local priorities, increase local choice and improve performance by removing unnecessary controls that stifle local innovation.
7.36 The Government is currently reviewing how it allocates support for capital expenditure to local authorities. A consultation document outlining the options for future capital support to Local Authorities will be issued shortly. This will focus on support for traditional (non-PFI) capital expenditure. Give the desire to improve efficiency and flexibility and recent developments in the PFI market, this review will provide the context for the Government to consider the PFI credit regime and how best to support the principle that there should be no bias in favour of particular procurement options and a genuine range of procurement choices available to Local Authorities.