10 June 2005
Likely PAC chair says civil service pay structures need to include higher rewards for specialist staff
The government must overhaul the way it recruits and retains senior staff working on Private Finance Initiative deals to stop contracting advisers taking the public sector 'for a ride,' a senior MP has demanded.
Edward Leigh, chair of the influential Commons' Public Accounts Committee in the last Parliament, warned that Whitehall needed 'radical reform' of its senior civil service pay structures to allow substantial packages for specialist PFI staff.
Leigh, addressing a National Audit Office conference on June 7, also attacked the public sector's continued PFI failures, claiming that the private sector still held the upper hand when deals were signed because of its heavy investment in the skilled technicians that public bodies lack.
Citing examples such as the PFI deal for the Norfolk and Norwich University Hospital NHS Trust and the Inland Revenue's Mapeley Steps contract, Leigh said the failure of the public sector to recruit and retain specialists left the door open for private partners to glean disproportionate returns.
'You're never going to have a level playing field when you have the potential for private sector specialists to earn huge salaries and you don't have the same remuneration structure in the public sector,' he warned. 'Something has got to change and I don't think the solution is to keep spending more and more on advisers because they just take the public sector for a ride. You need to embed people in the public sector and pay them the going rate… to compete with the private sector.'
The comments by Leigh, who is expected to be re-elected as PAC chair, dismayed some senior delegates. They responded by claiming that the government has improved the way PFI deals are negotiated to ensure value for money.
Richard Abadie, head of PFI policy at the Treasury, told Public Finance the government took a big step forward with the publication of documents such as 2003's PFI: Meeting the investment challenge, which aims to establish 'clear limits on the appropriate use of PFI'.
Earlier, Abadie told delegates the Treasury was working on further small changes to deals that could make a 'big difference'.
James Stewart, chief executive of Partnerships UK, the Treasury agency set up to facilitate public-private partnerships, told PF: 'Five years ago there were few, if any, genuine PFI experts across government but now we have developed a core skills base.'
But Stewart acknowledged that civil service expertise often lagged behind that in the private sector, and called for adjustments to Whitehall employment contracts. 'Specialists are almost discriminated against across the civil service, because the generalist is still king. I'd like to see more PFI-related targets included in individual contracts to improve knowledge,' he explained.
One senior Treasury source questioned, however, whether the Cabinet Office's new Professional Skills for Government programme, which aims to increase specialisms among senior civil servants, would initiate improvements in the PFI.
A further problem faced by the government's senior PFI staff, the source said, is that it is 'politically difficult' for them to influence other public bodies' deals. 'This is a particular problem with local authorities. There is guidance out there, but many local organisations only ever enter into a few PFI deals so they can't develop the expertise.'
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