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EDITIONS
Wednesday, 5 February, 2003, 06:46 GMT
Upbeat verdict on private finance projects
Care home for the elderly to be built in Turn Furlong, Northamptonshire
Artist's impression of a forthcoming PFI care home
Most building projects under the controversial Private Finance Initiative are being delivered on time and under budget, according to the public spending watchdog.

The National Audit Office said PFI - which involves private firms in public sector projects such as hospitals, roads and government offices - seemed to be offering some improvements.

It said less than a quarter of 37 construction projects it looked at came in over budget.

PFI should incentivise the private sector to deliver good quality buildings on time and to the price agreed

Sir John Bourn, NAO
That compared to almost three-quarters built in the conventional way before the introduction of PFI.

Delays were also down sharply, with only 24% finished late under PFI, as against 70% which were late before PFI.

The report said the findings represented a "dramatic improvement" in performance.

The report also said some PFI contractors had lost money - thus absorbing risks which may have once have been borne by the taxpayer.

More surveys urged

"The theory is that PFI should incentivise the private sector to deliver good quality buildings on time and to the price agreed with the public sector," said NAO head Sir John Bourn.

WILTSHIRE EXAMPLE
The Great Western Hospital, built under PFI
Swindon PFI hospital opens on time and under budget
"The results of our census show that this is being achieved in central government."

However, Sir John said it was impossible to say whether the improved results could have been achieved using traditional procurement methods.

He urged government departments to conduct their own assessments of the value offered by PFI.

The chairman of the Commons Public Accounts Committee, Tory MP Edward Leigh, said the findings did not mean the "PFI route" was always preferable.

"Greater certainty is not the same as better value for money. In our many examinations of PFI deals we continue to find mixed results," he said.

Last month, the other public spending watchdog, the Audit Commission, was extremely critical of PFI projects in education.

The first PFI schools were "significantly worse" than other new schools in England and Wales, it said.

Union opposition

BBC economics correspondent Evan Davies said the mixed views from various different reports were not particularly illuminating.

"The tentative conclusion to draw is the unsatisfactory one - that PFI sometimes works and sometimes doesn't."

In our many examinations of PFI deals we continue to find mixed results

Edward Leigh, Commons Public Accounts Committee

PFI was originally dreamed up by the Conservatives in the early 1990s, and adopted by the Labour government as a way of saving taxpayers' money and getting new projects such as schools and hospitals quickly.

Trades unions and many Labour backbenchers are opposed to the increasing use of the private sector in providing public services.

They believe private companies are more concerned with increasing profit margins at the expense of quality and employees' pay and conditions.

They argue the taxpayer will be left with a larger maintenance bill than under the traditional procurement methods.


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See also:

16 Jan 03 | Education
14 Jan 03 | Politics
30 Dec 02 | Scotland
21 Oct 02 | Health
17 Oct 02 | Business
11 Oct 02 | Politics
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