Wednesday, 20 July 2011

PFI a lesson in Public Sector naivety

I am pleased to read on the BBC website that the government has run a pilot looking at saving money on PFI contracts and found that, surprise surprise, substantial savings can be made on existing PFI contracts. Pilots in the MoD (which is ironic considering the waste I refer to in my previous post) and at Hatfield Hospital could result in 5% savings on existing contracts. Considering the cost pressures in the NHS, that could play a major factor in helping it meet its efficiency targets.

No one can fail to be impressed by the new PFI constructed facilities, whether that be the new "tip" (sorry refuse centre) in Prudhoe to Hexham hospital or the school buildings in places like Birtley in Gateshead. I am not opposed to using private finance but PFI has been a disaster. Simply, the public sector has not employed contract specialists of the calibre of the people on the other size of the table. I remember, in my previous life as a civil servant, being involved in attempts to hire a PFI contracts negotiator for a major schools project. Adverts were placed for the post at high wages with no success. Simply, the lawyers we wanted were being paid more than the public sector chief executives pay. A wise move, as the private sector is making billions of pounds from PFI.

The current government seemed to have learnt little from the Labour governments failure on PFI. It has pressed on with countless PFI projects. If a public sector funded project is better value but that increases the public sector borrowing requirement, then so be it.

I hope this initiative of the government will signal much better value on PFI and a taming of existing contracts. We could save billions of pounds if we take this seriously.

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