PFI in fresh probe

The Commons public accounts committee is drawing up new guidelines for private finance initiative deals in a move that will see parliament’s principle public-spending watchdog offer the government guidance on best practice.

Committee chairman David Davis said the guidelines were needed because of the government’s intention to increase the number of schemes using PFI and other forms of public/private partnership.

Davis said the PAC was now seeking to use its skills to recommend best practice for the future, as well as retrospectively examining public spending and government departmental performance.

The all-party group, already working on guidelines for IT procurement in the public-sector, has investigated several past PFI projects following National Audit Office reports. It wants to use the findings to guide future schemes, Davis added. The report, due before the end of May, is expected to concentrate on the need for proper competition and project management to ensure value for money.

Departments will also be urged to avoid – where possible – changing specifications after contracts have been let to prevent cost escalations.

The enquiry will run alongside a similar investigation by the Commons Treasury select committee. As Accountancy Age revealed last month, it is attempting to clear up the rules governing allocation of public sector capital used to support PFI schemes.

This all-party group will take evidence before June from major stakeholders about systems for allocating capital and current expenditure between the government and private firms. It will also look at the PFI’s process and the implications for government spending.

The reports will complement the government’s own PFI review – by Sir Malcolm Bates – which is due for publication shortly. The Treasury is also expecting guidelines on the accounting treatment of PFI deals imminently.

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