Q81 Mr Burstow: Presumably that process adds additional time to getting a change through and approved. How much extra time does that process of seeking derogation take?
Mr McKechnie: It depends. Some projects do not seek any derogations at all. Some projects do seek derogations and it may add some time but I hope it does not add too much.
Q82 Mr Burstow: Given that one of the points made in the Report, on page 17, paragraph 2.19, perhaps identifies a skills gap, particularly in respect of public sector managers when it comes to making assessments about the lifecycle, what steps are you taking to address that apparent skills deficit there to ensure that, when it comes to these sorts of processes, a proper assessment is being made of the lifecycle costs?
Mr McKechnie: Again I have to say that this is something that is being addressed in the training. The operational taskforce is doing some of that. The 4ps, which is the Local Government Association entity that looks after PFI projects, is doing some of that. The NAO itself does training programmes, the departmental PFUs assist in this. There is a number of different areas where training is provided to support the guidance which is issued on these subjects.
Q83 Mr Burstow: Over what period of time has that training been? When did it start? Was it before this Report was commissioned, after this Report was commissioned?
Mr McKechnie: It goes back a very long way; I do not know when it started.
Q84 Mr Burstow: Was it before 2006?
Mr McKechnie: Yes.
Q85 Mr Burstow: So given that it is training that has been around for some considerable time, how come the National Audit Office has found that this is still a deficiency? What is being done to react to this finding rather than just relying on what has been done in the past which clearly has not been sufficient?
Mr McKechnie: It is a question of rolling it out more, getting better traction with the training.
Q86 Mr Burstow: In the same way that the guidance gets traction when it comes to ensuring you have the right number of people monitoring contracts?
Mr McKechnie: Again, the training should address these issues. As John said earlier, we cannot enforce it but we can encourage it.
Q87 MrBurstow: So it may not actually result in any change at all?
Mr McKechnie: I hope it will.
Mr Kingman: It would be wrong to think this guidance just disappears into the ether. We have good reason to believe that people do take notice of our guidance. I cannot tell you, because it is not the case, that there is 100% adherence to it.
Q88 Mr Burstow: But in a way you cannot tell us anything about compliance with the guidance because you have had to rely on the NAO Report to flag up these issues. I have not heard that there is a mechanism in place that actually enables you to know about compliance.
Mr Kingman: There are mechanisms and the SPV fees point we discussed earlier is a very good example of one that we dealt with well before the NAO began their work.
Q89 Keith Hill: I would just like to put a question to the NAO on this thorny issue of the presence or not of full-time management. Is there any correlation between the absence of full-time management and the performance of PFI projects in relation to the cost of change?
Mr Burr: May I just ask the study director?
Mr Robertson: We are not able to do that precise calculation but what we are observing is a wide range of staffing, particularly in larger projects, ten as the Report says, with annual unitary payments of more than £3 million each not being managed on a full- time basis. So while we cannot draw any systematic conclusions, it is our strong feeling that that is a risk to value for money. We cannot put a figure on it but it is undoubtedly a risk to value for money.
Q90 Keith Hill: So you have a feeling that it is a risk?
Mr Robertson: It must be in large projects, in these particular cases paying £3 million a year each, not to have a full-time manager.