7. PFI financing costs more than government financing because the state can borrow at a cheaper rate than the private sector. While we are confident that PFI costs more than conventional procurement, neither we nor the National Audit Office nor the Public Accounts Committee can find any evidence of the benefits the Government claims for it. It is unacceptable that almost 30 years after the first PFI projects were initiated, the Treasury cannot produce an evidence base to support its claims that PFI is worthwhile for any reason apart from the fact that it takes debt off balance sheet. (Paragraph 45)
8. The Treasury and the Government should not approve any further PFI projects until they can clearly justify, based on evidence, their claims about the benefits of the scheme. It will seem bizarre to many observers that the Government has chosen to pay more than it could for £60 billion worth of projects, without evidence of any benefits from the extra cost involved in using this financing method. Ministers should be able to choose to use state finance where it is clear that private finance would bring no benefits. The Treasury should scrutinise in particular the recently approved transport projects (the A303 Stonehenge tunnel and roads and the £1.5 billion approach roads to the Lower Thames Crossing) to ensure that there is good evidence that private finance represents the best value for money in these cases. (Paragraph 46)
9. The Government should investigate the experience of the Scottish Government with the Non-Profit Distributing model and report back in its response to this report its view of what the UK Government can learn from the Scottish experience. (Paragraph 47)
10. The Government has previously maintained that it selected private finance only when it judged it to be value for money to do so. However both the comments of the Civil Service Chief Executive, and more importantly, recent changes to the Treasury's guidance on refinancing make clear beyond a reasonable doubt that the Government's true reason for using the Private Finance Initiative or PF2 is that the debt does not have to be shown in the National Accounts or within the national debt. (Paragraph 48)
11. Balance sheet treatment is not an appropriate justification for the choice of method of finance or for the terms of government contracts, especially if it means the contracts cost the Government more. We welcome the decision to clawback excessive profits from refinancing; however, it is wholly unacceptable that the Government have reduced this in order to conceal the true nature of public sector liabilities. The Government should note in their response that our recommendation follows similar arguments from both the Treasury Select Committee and the Public Accounts Committee. Without compelling evidence and justification from the Treasury, the Government should re-introduce refinancing provisions allowing 50% gain share for the public sector. (Paragraph 49)