PracticeAuditWatchdogs clash over PFI scheme

Watchdogs clash over PFI scheme

PAC calls National Audit Office to account over conflict of interest on LIFT schemes

The National Audit Office has come under severe criticism from MPs for using
a company that advises bidders for NHS private finance scheme contracts to carry
out a financial evaluation of the same billion-pound scheme.

The Public Accounts Committee has been examining local improvement finance
trust schemes used to finance doctors’ surgeries and other public sector
projects.

At a meeting last month, MPs panned the NAO for using Operis to work on the
schemes, when the financial modeling consultancy was also advising participants
in the schemes. Operis was engaged to carry out the work, without it going out
to tender.

By the end of this year, projects to the value of £937m will have been
started on buildings funded by the scheme. MPs were unhappy that the schemes had
not been subjected to more rigorous analysis. ‘How can it be that a company
involved in LIFT schemes was used by the NAO to give the committee an appraisal
of the content of LIFT schemes? How can that possibly happen?’ asked Jon
Trickett, Labour MP for Hemsworth.

The NAO, led by Sir John Bourn, has undertaken to produce more research into
the issue. ‘It is entirely consistent with our good practice to have used
Operis,’ an NAO spokesman said.

‘We often use people who are involved in the sector, and the work was quality
controlled. We were quite content that they were not conflicted by their role in
the sector.’

It is highly unusual for the NAO and the Public Accounts Committee to
disagree so openly. The two bodies prefer to work in tandem to scrutinise
government accounts. The disagreement highlights a lack of consensus on the
cost-effectiveness of PFI schemes.

Committee chairman Edward Leigh said that he was ‘neutral’ on the matter. ‘I
want to get the NAO’s side of the story. We also have to investigate much more
fully whether we are getting value for money [on LIFT schemes],’ he said.

Angus Dunn, chairman of Operis, conceded that the consultancy had been
advising bidders on LIFT schemes at the same time as working for the NAO. ‘The
one case of overlap was known to the NAO before it hired us, and we believe it
was entirely happy with what we did,’ he said.

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