1.22 A normal feature of PFI contracts is that the authority will be entitled to reduce the payments due to the contractor if the contractor's performance falls below certain contractually defined standards. The amounts that can be deducted will vary depending on the extent of the shortfall in performance. 58 per cent of authorities who had an agreed performance and performance deduction review process told us they had made performance deductions in accordance with those processes. 25 authorities told us that they had made deductions totalling £10.3 million, ranging from £1,000 on one contract to £5.6 million on the Ministry of Work and Pensions' PRIME project. Deductions made in the second year of the PRIME project were lower than in the first suggesting that the performance regime was having the desired impact on improving performance.
1.23 64 per cent of authorities told us that they had learnt lessons from the performance review process and over half of these told us that they had implemented changes as a result. Our survey also showed that 60 per cent of contractors have also learnt how to improve the service they provide through these processes. Examples of lessons learnt and changes implemented are shown in Figure 7.