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MPs unhappy with PFI progress

27/11/2007

An influential parliamentary committee has criticised the government for a lack of improvement in private finance initiatives (PFIs).

The public accounts committee (PAC) says that the Treasury has "done little" to remedy the problems it flagged up in 2003 in its first report into PFIs.

Its members claim that UK taxpayers are "not always getting the best deal" from PFI contracts owing to poor procurement techniques.

Today's report adds that there has been "no improvement" in tendering times over the last four years, while "significant risks" to public money remain when authorities make late changes to deals.

Edward Leigh, PAC chairman, said that the tendering of PFI projects had worsened over the last four years.

"If the public sector is to get value for money from the deals, then the market must be truly competitive," he explained.

"What we find instead is that a third of recent projects attracted only two viable bids. This may well become an even bigger problem than it is at present."

PFI contracts, which appeared for the first time under John Major's Conservative government at the beginning of the 1990s, provide support for public private partnerships (PPPs).

During Gordon Brown's ten years at the Treasury, PFIs were expanded despite frequent opposition at Labour party conferences.

Responding to the PAC's claims, a spokesman at the Treasury said the government remained "committed to reducing procurement timescales".

"Gaining value for money from large complex projects necessarily involves investing time and effort in the procurement process," he explained.

"The procurement times under PFI reflect the upfront investment needed to ensure the long-term success of the project."