New PFI employee rule

by Carol Millett



A Treasury ruling that ancillary staff such as cleaners, porters and cooks will no longer have to transfer to the private sector under a private finance initiative deal is raising concerns with major contractors.

The ruling has been prompted by the Treasury's adoption of the Accounting Standard Board's rules on private finance initiative deals which allow the separation of the 'soft services' from the rest of the contract. The Government is also under pressure from public sector unions that oppose the transfer of staff to the private sector as part of the PFI deal.

The ruling has already impacted on the third wave of PFI hospitals with Gloucestershire, Hull and South Derbyshire all open to bids which exclude soft services.

Jennie Price, chief executive of Major Contractors Group (MCG) told CJ this week: "We are worried about this move to retain soft services in the public sector and we do not believe it will give value for money. The private sector delivers these services more efficiently and financial penalties in PFI deals ensure that standards are kept high. In addition, the savings made by the synergy of the design and service provision being on the same side of the table will be lost. The taxpayer is likely to get a poorer product if the two are separated." The MCG has pledged to lobby hospital trusts to ensure that they continue to include soft services in PFI deals.

Leading PFI lawyer Barry Francis of Beechroft Stanleys warned that separating the soft services could lead to interfacing problems. "It will raise the question of who is responsible for the fabric of the building. If for example the cleaning is retained in the public sector and is done inefficiently, this in turn could affect the maintenance of the building which is in the private sector. Who takes responsibility for that?"