27 June 2003
Two senior public spending watchdogs have expressed scepticism over the usefulness of public sector comparators and concern at their undue prominence in the procurement of Private Finance Initiative deals.
Edward Leigh, chair of the Public Accounts Committee, said he and his colleagues had become 'very sceptical' about the results produced by PSCs, which are supposed to illustrate the costs of conventional procurement compared with those incurred under the PFI.
Leigh, speaking at a conference organised by the National Audit Office, said few in the public sector were willing to recognise the intrinsically speculative nature of the PSC and most credited it with a false precision. 'It is found to have an accuracy it simply cannot have, because of the inherent uncertainty of the assumptions on which it is based,' he said.
Leigh warned that the 'political appeal' of the PFI, based on the fact that the 'public sector gets its project now but pays later', risked distorting priorities. The PSC is often used to this end. 'It miraculously appears to show that the PFI deal is somehow slightly cheaper than conventional procurement.'
The Treasury is expected to launch a consultation next month on possible revisions to the PSC, in an acknowledgement of increasing concerns that the exercise has limited value.
Jeremy Colman, the NAO's assistant auditor general and head of the watchdog's PFI group, later echoed the MP's comments. He said there 'was a role for PSCs' in the procurement of PFI projects, but warned that the uncertainty of the assumptions they are based on is 'a point that is almost universally neglected'.
He suggested that, in view of this, much unnecessary work performing 'complicated calculations' is carried out on PSCs, often by external consultants being paid large fees. He said: 'I would very much question the value of such work.'
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