PFI accountancy firms and management consultancies, with the backing of government, have played a leading role in devising and conducting biased VfM assessments. Arthur Anderson (a forerunner of Accenture), Mott MacDonald and KPMG have each been criticised for manipulating findings in order to promote PFI policy.24 25 The government also adopted biased findings of Mott MacDonald and KPMG studies as part of the official VfM approach.26
Government departments and public authorities have also been shown to distort VfM assessments in order to support the PFI option and evade the government's budgetary controls. Researchers have identified several cases of distortion since 1998. In 2009, an official body, the National Audit Office, provided evidence of a central department falsely claiming that a PFI option was cheaper than conventional procurement. By 2010 the National Audit published advice that PFI was less likely than formerly to be a value for money and that departments should not presume privately financed project offered a cost effective solution.
Although PFI policy is justified by VfM claims, it was not until 2010 that the NAO made an attempt to assess performance outcomes and contract compliance among privately financed projects in the NHS.27 However, the audit office was unable to undertake a systematic assessment because there had been insufficient monitoring at project level and because private contractors had withheld data from public authorities. For example, contractors did not disclose their spending on lifecycle maintenance.
Survey data showed that authorities devoted inadequate resources to contract monitoring, that contract enforcement was weak, that contractors regularly sought to pass risks back to the public sector, and that some authorities were paying more for PFI services than they needed to.
Where evidence was available, the audit office judged that some trusts were paying more for PFI services than they needed to but it could not examine sources of variation because of "the lack of reliable data." Service cost analysis could not be done after 2008-9 because "the NHS stopped collecting the data." The office identified substantial but unexplained variations in the facilities management fee component of the annual unitary charge. For example, in the sample of trusts the price for feeding a patient varied fourfold (from £3.16 to £12 a day) and the price per item of laundry varied from 20p to 96p.
The audit office concluded that, in the absence of formal mechanisms for assessing whether the initial prices which trusts agreed to pay for maintenance remain value for money, the price was likely to become unrelated to the actual cost of delivering the maintenance services.
Evidence of poor value for services contracted out to the private sector is not new. A 2007 unpublished, though informally circulated, review by the audit office, based on Healthcare Commission data, raised serious concerns about the relative cost and quality of security, linen and laundry services, portering, and cleaning services among the first wave of NHS PFI projects.28
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24 Pollock, A., J. Shaoul and N. Vickers (2002), 'Private Finance and 'value for money' in NHS hospitals: a policy in search for a rationale', British Medical Journal, 324, pp. 1205‐1209.
25 Pollock AM, Vickers N. Private pie in the sky. Public Finance 2000 Apr 14:22-23.
26 Pollock, A., D. Price and S. Player (2007) 'An Examination of the UK Treasury's Evidence Base for Cost and Time Overrun Data in UK Value-for-Money Policy and Appraisal', Public Money and Management, 27, 2, 127-134.
27 National Audit Office. The performance and management of hospital PFI contracts. London: National Audit Office 2010.
28 National Audit Office [2007a], The operational Record of the First Wave of PFI Hospitals, unpublished paper.