By David Williams
16 February 2011
The Treasury has deployed a team of commercial and legal experts to scrutinise current Private Finance Initiative contracts in an attempt to find new savings.
Lord Sassoon, commercial secretary to the Treasury, today launched a pilot project that will examine the details of a PFI contract at Queen’s Hospital, Romford, in the hope it can become more efficient, flexible and cost-effective.
A group of professionals with experience in the legal, technical and commercial aspects of PFI will recommend how ongoing costs can be saved in the deal, which was signed in January 2004 and still has £835m left to pay.
Lessons will then be applied across all PFI contracts, which are expected to cost the public sector £8bn in 2011/12.
Lord Sassoon said: ‘PFI contracts are not immune from savings. It is critical that government urgently addresses every opportunity for savings across all contracts. No matter how complex they may be. We owe it to the taxpayer to eliminate wasteful practice and gold plating in contracts.’
Cabinet Office minister Francis Maude said the Romford pilot was the first of several reviews of large contracts, not all of which would be PFI deals, while health minister Simon Burns said it was ‘great news for the hospital’.
Burns added:‘The focus must be to find efficiency gains and savings within the PFI contract, allowing the quality of care and patients themselves to remain the priority.’
The Treasury published draft guidance on how to make savings in PFI last month. This will be revised when the Queen’s Hospital pilot has been completed.
The pilot is part of a wider public sector contracts review as a result of an efficiency study conducted last year by Sir Philip Green.
