Smith keeps door open for Puk equity stakes

27 Jan 00
Partnerships UK, the successor body to the Treasury Taskforce, may yet take an equity stake in Private Finance Initiative projects, MPs were told on Wednesday.

28 January 2000

Andrew Smith, the chief secretary to the Treasury, said the government was still considering the issue. 'It's a quite finely balanced judgement how we take this forward,' he suggested.

Giving evidence to the Treasury Select Committee Inquiry into PFI, Smith said that Puk's role was still evolving, although its launch is only weeks away.

He accepted that direct investment by Puk could lead to concerns over conflict of interest, but added: 'An equity stake would give an enduring basis to the relationship and a better understanding of the underlying business. But we are not talking about a huge equity stake.'

Adrian Montague, Puk's deputy chairman designate, said that equity involvement would never be forced. 'Both the department and the private sector bidders must want Partnerships UK to be there, but it can't be thrust down the private sector's throat.'

Smith took the opportunity to launch a robust defence of PFI. He discussed the findings of a report commissioned from consultants Arthur Andersen which suggested that PFI projects offered an average saving of 17% against the public sector comparator.

He also said that assertions made by academics in earlier committee sessions that PFI has reduced the total number of hospital beds were 'inaccurate and ill-judged'.


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