Infrastructure
Operational PFI savings programme
The Government is determined to maximise the value for money and efficiency of PFI contracts in line with the expectations of the Public Accounts Committee, Treasury Select Committee and taxpayers. In July 2011, following positive pilot reviews at the Queen’s Hospital Romford and three Ministry of Defence projects, the Commercial Secretary to the Treasury committed that government would save at least £1.5bn from the existing stock of PFI projects in England. Savings made will be recycled back into frontline services by the contracting authorities.
To support this commitment a central programme team has been set up in HM Treasury. The programme will bring together cross-cutting and project specific savings initiatives with review activities being delivered by local contract management teams across the country.
The central programme team will:
- support departments and local contracting bodies in maximising the potential savings by offering co-ordination, guidance and support for the operational savings process;
- improve the transparency and management of existing contracts through a Voluntary Code of Conduct covering the relationships and behaviours of the parties;
- consolidate, co-ordinate and validate the significant amount of work already underway within departments, local authorities and NHS Trusts, so that momentum can be built and good practice shared; and
- learn lessons from current projects which will be fed into HM Treasury’s work on fundamentally reassessing the PFI model.
In line with the findings from the pilots, the programme will look to identify savings from a number of broad areas including:
- effective management of contracts;
- making efficient and flexible use of facilities; and
- reviewing service requirements.
The central programme team will work closely with sponsoring departments, the wider public sector and private sector partners to ensure that activities are effectively structured to maximise the delivery of savings whilst keeping the effort, and cost, to all parties to a reasonable level. In addition it will ensure that government efficiently leverages its knowledge, relationships and capability to support the objectives.
The delivery of achievable savings in privately financed contracts is seen as a high priority and the programme will be subject to cross departmental ministerial oversight.
Making savings in operational PFI contracts
The guidance document below is the final version of the draft guidance by the same name which was published in January 2011. It is intended to help government departments and local authorities identify opportunities to reduce the cost of operational Private Finance Initiative (PFI) contracts.
It highlights the need for strong contract management to achieve optimum performance from a PFI contract and suggests options public sector bodies may consider to reduce the cost of a contract.
It also includes sources of support and emphasises the importance of protecting value for money. The guidance draws on engagement with central and local government and the findings of savings pilots at Queen’s Hospital in Romford and Ministry of Defence projects.
Share
