Report slams PFI

by Carol Millett



Contractors have sent damning progress reports on the private finance initiative to Sir Malcolm Bates who heads the review panel which is looking at how the PFI process can be improved.

Both the Construction Confederation and the Major Contractors Group have expressed frustration at the continuing lack of good deals coming to the market.

They also cite concern at the high cost of bidding, the rising amount of risk being passed on to contractors; the poor quality of many of the financial and legal advisers used by public sector clients and the Treasury's slowness in delivering standardised PFI contracts.

Construction Confederation chairman Alan Crane said contractors were disappointed with the lack of good PFI deals coming through and concerned about the rising amount of risk being off-loaded onto the private sector.

He said: "There seems to be a policy of ratcheting up the amount of risk passed on to the private sector on a deal-by-deal basis." As a result, he said: "Deals were in danger of becoming too expensive or poor value to the public sector."

The MCG has also expressed its concern at the demise of the Treasury Task Force next summer. "We believe it is very important there be a central support for the PFI programme. Some Government departments have become very adept at PFI deals, but there are others that are still very new to it and some who will use PFI very infrequently, and therefore, desperately need some form of central support," said MCG director Jennie Price.

Price also warned against the public sector's tendency to use poor quality advisers.

"The quality varies enormously and many just don't have the appropriate skills, which makes it hard for them to give the right advice and hard for them to draft the necessary documents, which means that the whole process takes that much longer," she said.

The review is the second to be led by Sir Malcolm, chairman of the Pearl Group, and is charged with making recommendations on how the Government's PFI programme can be improved, before the Treasury Task Force is wound up next summer.

Sir Malcolm's first review recommended the creation of the Treasury Task Force to help Government departments and agencies assess the commercial viability of large projects.