PFI must be kept credible.
Rumours of the death of the controversy surrounding accounting for private finance initiative deals are greatly exaggerated.
The row over the balance sheet treatment of the last government’s great wheeze to increase private investment in public services appeared to have been settled last summer when the Accounting Standards Board finally agreed guidance with the Treasury – a move that did much to alleviate concerns that the PFI was little more than creative accounting.
But last week MPs reopened the row when Tory members of the powerful Commons Treasury Committee warned against sidelining ASB guidance and of the danger of selecting projects not on merit but on whether they could be kept off the Treasury’s balance sheet.
Ministers will need to tread carefully. The spending plans outlined by Gordon Brown last week include massive additional sums for improvements to the health service. The PFI will play no small part in delivering that.
And if, and when, Ken Livingstone is elected London mayor, the debate over tube funding – and whether or not to opt for a public private partnership – will intensify. But London Underground bidders are threatening to charge a premium until they know who is mayor. Bidders for other projects will put a price on political, and accounting, uncertainty.
The ASB has given the PFI credibility. The government must stick to the board’s rules if the PFI is to stay credible.