PFI - New rules clear confusion
The Treasury has finally published accounting rules for private finance initiative deals, a move welcomed by business and the profession as clearing up the confusion surrounding public-private partnerships.
The guidance is intended to help negotiators transfer most of the risk to the private sector, so the projects can be taken off the state’s balance sheet.
Accountant Robin Herzberg, concessions officer at Tarmac, said the guidance was a ‘major step forward’ and would provide clarity for future PFI deals.
‘We no longer have this worry that the pool of projects will be on the government balance sheet. From now on projects can be driven by value-for-money rather than the accounting issues,’ he explained.
PFIs were introduced by the last government to get expenditure off the state balance sheet – a move that will prove crucial if the UK is to enter into the European economic and monetary union.
Ken Wild, who chaired the ASB committee on PFI, said he expected the long-running debate over PFI accounting treatment to be finally laid to rest following publication of the guidance.
‘It is a serious attempt to take our original document and put it into terms where people without accounting knowledge can apply it and come to sensible answers,’ Wild said.