PracticePeople In PracticeLocal PFI project did not represent value for money, says Birmingham council FD

Local PFI project did not represent value for money, says Birmingham council FD

The finance director of Birmingham City Council said today she believed a major PFI project for the city's schools did not represent value for money.

Addressing the CIPFA Scottish branch conference in Crieff, Sarah Wood – viewed as a high-flyer in local authority finance – said she had doubts about the project which saw seven schools rebuilt and three refurbished.

Figures show the project in Britain’s largets local authority cost £78m as a PFI project against an estimate of £83.5m as a traditional public sector scheme.

Wood said she was not convinced by the project but it was the only way to raise large sums of money for public services. The one consolation and ‘duty’ she said was that she could justify the figures to Birmingham City Councillors.

She predicted that in future PFI projects like the one in Birmingham would be questioned and finance directors would be asked why they went ahead with the schemes.

Her remarks followed a presentation from George Black FD at Glasgow City Council who said a PPP project for schools in the city had been a great success.

Wood said: ‘I’m not sure it is value for money. But it is the only game in town. It is the way you get money back into your services. So my duty is to make sure I give sound finance advice to my elected members and that I can justify the figures that I’ve quoted.

‘So I can justify the figures, but I do have that slight reservation, that slight doubt in my mind.

‘It wouldn’t surprise me if in five or ten years George and I are stood before an audit committee somewhere and then saying ‘why did you do that?’ and ten years on we can’t quite think of all the good rational arguments that we thought of when we were talking to elected members.’

Woods comments will be particularly hard to bear for the government in the wake of its enthusiasm for PFI as a way of funding public services. Wood said making sure value for money was gained was as hard as working under the old Compulsory Competitive Tendering scheme.

George Black said while the Glasgow PPP project had been a success, it would not have been possible without grant aid from the Scottish Executive.

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