10 We conclude there is 'sufficient evidence' for £1,232 million of the forecast signed savings. These savings were supported by relevant and reliable evidence and realistic assumptions. This represents 90 per cent of our sample value of £1,372 million (paragraph 1.18 and Figure 3).
11 We conclude there is 'partial evidence' for £48 million of the forecast signed savings. These savings were supported by some evidence but there were some uncertainties or measurement issues. This represents 3 per cent of our sample value of £1,372 million (paragraph 1.19 and Figure 3).
12 We conclude there is 'insufficient evidence' for £92 million of the forecast signed savings, given our concerns about the evidence base. This represents 7 per cent of our sample value of £1,372 million. The Treasury told us before our review began that one authority had notified it that a signed saving of £48 million was being contested by the contractor. Another saving of £37 million lacks any supporting evidence. A third authority reduced its reported saving by £7 million after reviewing its calculations in response to our review (paragraphs 1.20 and Figure 3).
13 The savings 'pipeline' of £1.3 billion should deliver further savings. We looked at a non-representative sample of four of those pipeline savings which are most certain (termed 'agreed' savings). Based on our understanding of these savings we conclude that the Treasury's approach to recognise only a proportion of the savings for internal purposes is reasonable. There is a reasonable prospect that in due course some savings in the pipeline will be converted into signed savings (paragraphs 2.4 to 2.6).
14 Of the 684 operational contracts, 566 have not yet reported any savings to the Treasury. These 566 contracts have a total remaining unitary charge of £151 billion. Some of these contracts may not have been fully examined for potential savings. This suggests there is scope to secure further savings (paragraphs 3.1 to 3.4).
15 There is scope for the two departments that sponsor the largest number of operational contracts to make further savings. Between them, the Department of Health and the Department for Education have oversight of 376 contracts (55 per cent of all operational PFI contracts), but they have so far reported only £63 million of signed savings or less than 0.1 per cent of the total remaining unitary charge of £93 billion since the start of the savings initiative. Both departments have a challenge in getting local bodies (NHS trusts and local authorities) to engage with the government's initiative which is being coordinated by the Treasury, but this is worth pursuing as there is likely to be scope for further savings (paragraphs 3.7 to 3.8).
16 Authorities we spoke to said the Treasury's reporting requirement had prompted them to maintain their focus on securing savings. Those authorities that have reported the largest savings are the ones with the greatest existing skills. The Treasury's guidance is likely to be most useful for those authorities without existing expertise who are just embarking on a search for savings (paragraphs 3.9 to 3.11).
17 Many savings reported to date derive from more effective use of assets. We found £178 million (13 per cent) of the savings we looked at were from reduced outputs or services, but many savings were from making increased use of existing assets. For example, the Ministry of Defence secured a £16 million saving by using excess capacity on an Army construction vehicle contract to provide vehicles for the Air Force and Navy at minimal additional cost. Intensive asset usage is something that other authorities may be able to replicate (paragraphs 4.5 to 4.6).
18 Authorities need the right skills and capacity to identify and negotiate savings. For example, Transport for London (TfL) has the commercial skills and dedicated resources to evaluate contract alternatives, and has reported savings of £476 million across three PFI contracts. TfL already directly operates services outside of PFI arrangements and so is well resourced to deliver inhouse the services covered by some of its PFI deals. A lack of skills and capacity in other authorities may be limiting their ability to identify and deliver savings (paragraphs 4.7 to 4.8).