Richard Threlfall, UK head of infrastructure, building & construction at KPMG, comments on the Government’s PFI review announcement ahead of tomorrow’s Autumn Statement:
“It is good that we finally have the PFI review conclusions – better late than never. On the substance of the PF2 announcement, it is decidedly mixed. Some elements of the new model are welcome, some are uncontroversial and others in my opinion are decidedly dubious and hopefully will quietly evaporate in the reality of implementation.
“What’s welcome is greater transparency and potentially public sector equity. On the latter, the caveat depends on how it is deployed. If it puts experienced public sector representatives on the board, and the public sector investing cash and incentivised to see the business perform, then it is a good thing.
“Uncontroversial, from most perspectives, is taking out the soft services from the contracts. The important thing is that we still have long-term contracts where the private sector is incentivised to build and maintain an asset at lowest cost over its whole life.
“And dubious? Well an 18 month “drop-dead, procurement over” is addressing the right point (procurements take far too long, and cost too much) but in the wrong way. It introduces a huge risk for both public authorities and bidders of a procurement being stopped, for reasons in some cases neither can control. Bidders should ask for their bid costs to be reimbursed every time a procurement gets canned. It is a sledgehammer that will crack the wrong nuts.
“Some of the changes appear to be born of a belief that in the world of PFI the public and private sectors are mostly out to try to outwit each other. The truth is we all benefit from good, robust deals. On the whole it looks like this might work and we can all get on now with doing deals, assuming we can find some.”
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