Figure 21 Response under PF2 to concerns with PFI expressed by the Committee of Public Accounts and Treasury Committee |
Parliamentary concerns | Changes made |
HM Treasury made no attempt to compare PFI with alternatives during the PFI reform process. However the Department for Education has commissioned work to compare PF2 with publicly financed schools. | |
Lack of data on equity returns | HM Treasury has committed to publishing expected and actual equity returns for all new PF2 deals. However, this does not include other PPP deals, such as rail rolling stock. |
Flexibility - should consider unbundling service contract | Deals are now less likely to include soft services; however, this is not directly related to the introduction of PF2, and long-term maintenance contracts continue. |
Encourage refinancing / make refinancing easier | Financing for deals is still agreed for whole term. The public sector cannot force refinancing, and most gains will flow to equity owners. |
Encourage more sources of finance such as pension funds | One of the stated intentions of the PF2 model was to encourage a wider range of investors to provide debt for projects. This has not materialised partly because there are very few deals. |
Make savings from legacy projects | The nature of PFI contracts means that savings are very difficult to make. There is no incentive for providers to find/share savings. There is significant interest from public authorities in making savings but little central coordination. |
Flawed value-for-money assessment | The value-for-money assessment tool was withdrawn but new guidance has still not been published. |
Accounting and budgetary incentives driving PFI use | Budgetary and accounting incentives persist. |
Source: National Audit Office assessment of Committee of Public Accounts reports; HC Committee of Public Accounts, Financing PFI projects in the credit crisis and the Treasury's response, Ninth Report of Session 2010-11, HC 553, December 2010; HC Committee of Public Accounts, Lessons from PFI and other projects, Forty-fourth Report of Session 2010-12, HC 1201, September 2011; HC Committee of Public Accounts, Equity investment in privately financed projects, Eighty-first report of Session 2010-12, HC 1846, May 2012 |