2.12 The Government believes that it is important to minimise the potential for conflicts of interest that may arise from the public sector acting both as an investor and a procurer of projects. Responses to the call for evidence also highlighted this as an important issue to resolve to enable an effective role for the public sector as an equity partner.
2.13 The Government will, therefore, establish a central unit, separate from the procuring authority, to carry out equity investment in future projects under PF2. The central unit will be located in the Treasury to ensure a clear separation of public sector interests as a procurer and an investor.
2.14 The commercial basis on which the Treasury will operate and manage the investment will be set out in a clear mandate and governance structure. While the Treasury will be governed by the principles setting out how to manage public funds in Managing Public Money3, the director which it appoints to the project company's board will have a fiduciary duty to that project company like all other directors. In order to minimise conflicts of interest, the central unit will not get involved in the bid development, procurement or project approval process.
2.15 The central unit will be staffed by individuals with the relevant professional skills to ensure effective representation on the project company board and an ability to make informed commercial decisions about the management of both individual projects and the portfolio of investment.
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