Q31MrBacon: It is just that the phrase "PFI policy" kind of suggests that it is being driven by outsiders.
Mr Kingman: It is not driven by outsiders at all, but we do need to formulate policy in away that is savvy. I honestly think this Committee would be the first to criticise us if we just had a bunch of bright young Treasury civil servants doing their best; we would be skinned alive.
Q32 Chairman: On this question of changes, what is your response to what is said in paragraph 1.10? There does not seem to me to be value for money. "One in five projects responding to our survey stated that work requested as a change since they became operational had been considered for inclusion in the original deal. In just under half of these cases, work was taken out of the original deals for reasons of affordability . . . It is likely, however, that these projects will have paid more to introduce this work after they were operational".
Mr Kingman: I would agree with you Chairman. On the face of it, it does not appear to be good value for money but it does slightly depend. If it is something you knew you were going to need, then it is obviously silly not to put that in the original contract rather than pay a price for it later. If it is something that you might or might not need, then it may be sensible to bring it into the contract later.
Q33 Nigel Griffiths: A lot of money is expended in political commitment on PFI and this Report gives the impression that you have a team that works on guidance, protocols and how it should operate. It then gets shoved out to the deliverers of projects that are very high cost; I am not saying they are not value for money. Then you almost step back and if they start messing up, you say: "Oh well, that is the price of local democracy". Is that account an accurate one?
Mr Kingman: I do not believe we have a political commitment or we are operating under a political commitment as it were to pursue PFI for its own sake. We are quite studiously neutral as between PFI and more conventional forms of procurement. Our view is very clearly that you should only pursue PFI if it is better value for money. We require every project to be compared against a public sector comparator. It is true that the Treasury cannot and does not have the capacity to second guess every procurement judgment that is made out there. I do not actually believe we are expert to do so and individual accounting officers are responsible for those decisions. For the very largest, we obviously take a close interest. We do have policies and, as James has described, one of the reasons we set up his organisation was so we could actively go out and hold people's hands out there.
Q34 Nigel Griffiths: You made a statement which is not in the Report but which certainly raised my eyebrows and that was that the impression given is that PFI is inflexible on the ground. Whose fault is it if that is the impression?
Mr Kingman: I am sorry. My comment was that I feel that people do have that perception.
Q35 Nigel Griffiths: Well whose fault is that?
Mr Kingman: I do not know whether it is anyone's fault, but people do have that perception.
Q36 Nigel Griffiths: It is the perception.
Mr Kingman: I think it is unfortunate that people have an inaccurate perception; yes I do.
Q37 Nigel Griffiths: Whose job is it to give them an accurate perception?
Mr Kingman: Ours and others, including the NAO. That is one of the reasons this Report is helpful.
Q38 Nigel Griffiths: So it has been a failure which is being addressed which is why the Report is helpful.
Mr Kingman: It is not a good thing if people have an inaccurate perception.
Q39 Nigel Griffiths: How have you dealt with that?
Mr Kingman: We are out and about all the time trying to put the case for intelligent approaches to procurement. As I said earlier, we are not in the business of proselytising for PFI for its own sake. We do think that it has a place.
Q40 Nigel Griffiths: This is not about proselytising for PFI: it is making sure that the right guidance is being implemented and what sanctions you have when it is not.
Mr Kingman: If you are the Department of Health or the Home Office or whatever, you have an accounting officer, you have procurement people, that is quite properly the affair of the department. What we do actively do is go in, with the help of OGC, and look at the procurement capability in departments and where that is weak we seek to persuade the department to strengthen it.