Treasury stonewalls over PFI

Sir John Kingman, managing director of the finance and industry directorate
at HM Treasury, was not popular with the Public Accounts Committee last week
when he tiptoed around a series of questions on the Treasury’s PFI accounting.

Called in to answer questions from politicians on how PFI was helping to
improve government efficiency, Kingman did anything but that as he avoided
inquiries from MP Richard Bacon on how the Treasury treated PFI on its books.

Under current PFI rules, certain financial information is not disclosed
publicly if it is ‘commercially sensitive’. Bacon wanted to know whether putting
PFI projects off-balance sheet was done because it was deemed commercially
sensitive, but was stonewalled by Kingman who refused to answer the questions
until he understood ‘the full ramifications’ of his answers.

Kingman promised to forward the information to the committee once he had had
an opportunity to double check PFI rules and provide conclusive answers, but it
was an offer that failed to impress the committee, which expressed its dismay
with Kingman’s lack of candour.

‘Senior civil servants are expected to come to this committee prepared and
able to answer questions,’ Public Accounts Committee chair Edward Leigh said.

Kingman’s reluctance to answer questions on PFI accounting, and the intense
scrutiny on the issue by the Public Accounts Committee, comes as the Treasury
works through a report from the Financial Reporting Advisory Board (FRAB)
criticising the Treasury’s current PFI rules.

The FRAB report was particularly critical of Treasury accounting guidance
known as Technical note 1.

The group said this led to an underestimation of government debt and was
littered with ambiguities and inconsistencies.

Related reading