23 July 1999
Announcing its response to Sir Malcolm Bates' second review into PFI on July 22, the Treasury confirmed the new successor to the Treasury Taskforce will be a privatised 'project manager' and not a bank. It will help design and negotiate PFI projects and finance their bidding costs, but will only rarely take equity stakes in the schemes.
The outcome is seen as a defeat for Adrian Montague, the head of the Taskforce. Montague has been leading a charm offensive to try to convince bankers and the Confederation of British Industry that a state-funded bank could act as a spur to PFI.
But opponents have argued that a bank would be unfair competition to the private sector and would lead to conflicts of interest. It is thought the Chief Secretary to the Treasury, Alan Milburn, over-ruled Montague's plans, and the Taskforce head will have no role in the new body.
Despite the watering-down, there was still opposition to the announcement. Howard Flight MP, shadow economic secretary to the Treasury, called it a 'woolly compromise' with no long-term future.
The Bates findings were announced at the same time as a report by Peter Gershon into Whitehall procurement. Gershon, managing director of GEC-Marconi Electronic Systems, recommended establishing a central agency, the Office of Government Commerce, to co-ordinate all government non-defence procurement.
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