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Friday, 11 October, 2002, 13:33 GMT 14:33 UK
Private funding comes under new fire
A primary class in a school computer room
Ministers say PFI is needed for building new schools
The use of private money in schools and hospitals has come under new fire as accountants working in public services said it would be cheaper to use taxpayers' cash.

Only 1% of 200 members of the Association of Certified Accountants (ACCA) strongly agreed that the controversial private finance initiatives gave value for money.

More than half of those questioned said it would be cheaper to finance new projects through public funding.

The survey comes after delegates inflicted a defeat on the Labour conference by calling for an independent review of PFI.

Test worries

Ministers rejected the demands and this week stirred more controversy in the public-private debate by agreeing plans for top hospitals to get new independence.

About a quarter of the accountants questioned in the ACCA survey have themselves worked on PFI projects.


The problem is that people at least feel that PFI is the only show in town

Andy Wynne
ACCA
Only one in seven in the survey thought the PFI projects were tested objectively - something supposed to happen on all cases.

The ACCA's Andy Wynne told BBC Radio 4's Today programme: "The problem is that people at least feel that PFI is the only show in town, so when the accountants have to undertake an appraisal of whether the PFI scheme will provide value for money or not, they're encouraged to show that it does."

Profit and loss

Conservative MP Edward Leigh, chairman of the all-party Commons public accounts select committee, said using PFI had to be a way of achieving value-for-money.

"If you do go down the PFI route then it's vital that it's fine for companies to make a profit out of it - but they must also be prepared to make a loss and there can be no question of bailing them out," said Mr Leigh.

Gordon Brown, Chancellor
Gordon Brown is talking of a "new localism" for public services
Ministers have insisted the National Audit Office reviews of PFI show they are effective in allowing new schools, hospitals and transport links to be built.

A review would mean delays which would break Labour's promise on improving the UK's public services, they argue.

Chancellor Gordon Brown and Deputy Prime Minister John Prescott have been at the forefront of rejecting union demands for a review of PFI.

On Friday, the two ministers used a visit to Hull to give more details of how they plan to give top performing local councils more freedom to spend their money without restrictions from central government.

Borrowing freedoms

The changes, already outlined in a white paper last year, will ease the rules which dictate how grants from Whitehall have to be spent.

The changes could affect up to 15% of total local authority budgets.

The plans could also lead to the number of inspections of councils being cut by half.

Mr Brown also said chosen councils would get more freedom to trade and to decide how much money they want to borrow.

But there would also be greater accountability through new Comprehensive Performance Assessments.

Mr Brown said the changes would help bring a "new localism where there is flexibility and resources in return for reform and delivery".

Local councils would be put at the heart of public services, "equipped with the freedom they need, and accountable to the communities whose needs they serve", said Mr Brown.

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 ON THIS STORY
The BBC's Hugh Pym
"Another piece of the PFI jigsaw"
See also:

03 Oct 02 | Business
07 Feb 01 | Scotland
25 Jun 99 | Education

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