By Tash Shifrin
18 March 2010
Ministers should publish figures showing liabilities under the Private Finance Initiative alongside regular statistics on public sector debt, the Lords economic affairs select committee has urged.
The report on the peers’ inquiry into PFI schemes and off-balance sheet debt was published on March 17. It called for ‘greater clarity’ about liabilities arising from PFI and other privately financed public sector development schemes.
The Treasury’s requirement that Whitehall departments should run two sets of accounts – one using departmental accounting standards and the other the system used for national accounting – was ‘far from ideal’, the lords said.
National accounts produced solely according to UK Generally Accepted Accounting Practice gave ‘a misleading picture of overall liabilities’ by excluding most PFI projects from official Public Sector Net Debt figures, they added.
The lords said that publishing separate figures for privately financed projects alongside those for PSND would show the economic significance of the schemes, which ‘now underpin huge swathes of public sector capital development’.
They added: ‘The motive widely imputed by witnesses to the Treasury for its perceived bias in favour of PFPs — their low profile in accounts — would also fall away.’
The committee also recommended that the government should remove the ‘institutional bias in favour of private financing of public procurement’, so that public authorities could choose which procurement route to take based on value for money in each specific case.
18 March 2010
Ministers should publish figures showing liabilities under the Private Finance Initiative alongside regular statistics on public sector debt, the Lords economic affairs select committee has urged.
The report on the peers’ inquiry into PFI schemes and off-balance sheet debt was published on March 17. It called for ‘greater clarity’ about liabilities arising from PFI and other privately financed public sector development schemes.
The Treasury’s requirement that Whitehall departments should run two sets of accounts – one using departmental accounting standards and the other the system used for national accounting – was ‘far from ideal’, the lords said.
National accounts produced solely according to UK Generally Accepted Accounting Practice gave ‘a misleading picture of overall liabilities’ by excluding most PFI projects from official Public Sector Net Debt figures, they added.
The lords said that publishing separate figures for privately financed projects alongside those for PSND would show the economic significance of the schemes, which ‘now underpin huge swathes of public sector capital development’.
They added: ‘The motive widely imputed by witnesses to the Treasury for its perceived bias in favour of PFPs — their low profile in accounts — would also fall away.’
The committee also recommended that the government should remove the ‘institutional bias in favour of private financing of public procurement’, so that public authorities could choose which procurement route to take based on value for money in each specific case.
