Ministers must avoid PFI mistakes in public service reforms

8 Jul 11
The government's public service reforms risk repeating past mistakes of Private Finance Initiative projects, a think-tank warned today.
By Richard Johnstone | 8 July 2011

The government’s public service reforms risk repeating past mistakes of Private Finance Initiative projects, a think-tank warned today.  

In a report published before the Open Public Services white paper is released next week, Centre Forum says there is a danger that in some service areas ministers are seeking to transfer too much risk to external providers, repeating costly PFI errors.

This is particularly the case where services are being considered for payment by results contracts, including the government’s new Work Programme.

Some PFI deals have been criticised by the National Audit Office following a failure by government departments to specify the information that would be needed to make decisions when signing contracts. The report’s author, Centre Forum chief executive Chris Nicholson, argues that this made some early PFI deals relatively poor value for money.

Nicholson said: ‘If public services are to be improved, there is much more that needs to be done. Currently information about public services is woeful. How can people make informed choices about services without good information and advice?

‘I also have real concerns that the government will repeat some of the mistakes of the early PFI projects, with its enthusiasm for payment by results. And while it claims to be “ownership-blind” when it comes to public services, the government seems to be influenced too much by politics.I hope the white paper will address these concerns.’

The report Your choice: how to get better public services, calls for the government to ‘proceed with care’ in reforms, with a clear regulatory framework to ensure high quality services can be provided at an affordable cost by private and third sector providers. It highlights five key principles for reforms, including the provision of better information to enable user choice and drive up standards through competition.

It also suggests the government should take a more ‘logical’ approach to the ownership of public services, less influenced by political whims.

Prime Minister David Cameron has pledged that the Open Public Services white paper, due to be published on Monday, would ‘signal the decisive end of the old-fashioned, top-down, take-what-you're-given model of public services’.

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