26 October 2007
The government must press ahead with changes to the accounting rules governing the treatment of the Private Finance Initiative to demonstrate the role of these projects in improving public services, the CBI is insisting.
The business organisation says ministers must be more transparent and make the case for the PFI on efficiency grounds, and that means putting more projects on government balance sheets.
Neil Bentley, the CBI's public services director, told a conference on the PFI hosted by the organisation on October 24 that the Treasury must publish its guidance on implementing International Financial Reporting Standards as soon as possible.
'We want innovative procurement techniques to be seen as a way to deliver better public services. Any benefits must not be waved aside by claims of accounting tricks,' he warned. 'We know that progress [on the guidance] is being made, but as time goes on, concerns and confusions will mount.'
Currently, £29bn of the £57bn worth of signed deals are off-balance sheet and so are not included in public sector net debt. Implementing IFRS rules will change that — and bring the government closer to its 40% borrowing limit, one of its two fiscal rules.
'Political sensitivity over meeting borrowing ceilings could mean public services suffer,' Bentley said. 'Unnecessary
price-taggery means people focus on the upfront paper cost of a project, not the long-term value for money and the outcomes which result.'
He also urged the government to stop sending out 'mixed messages' over its commitment to the PFI and be a more active champion, to help reassure firms operating in the market.
'Private support from ministers is not being reflected in the very public project cancellations or postponements,' Bentley said.
The CBI is also calling for new research to provide up-to-date data allowing comparisons between the performance of PFI and conventionally procured projects.
The data provided by the National Audit Office is 'beginning to show signs of age', Bentley said, and, while there have been claims that the PFI is having a positive effect on all forms of procurement, 'we don't have the information from which to draw clear conclusions'.
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