News / PFI changes ‘not value for money’

NHS organisations are generally not getting good value for money for changes in private finance initiative schemes, according to the National Audit Office.

The auditors said changes to PFI schemes were inevitable and the initiative gave trusts sufficient flexibility to make them when necessary. However, large changes were not always competitively tendered, while smaller ones were relatively high cost.

In a report on PFI projects across the public sector, the NAO found that health had the third highest number of alterations in 2006 – accounting for 24% of the total behind equipment (mostly defence contracts) on 29% and prisons (30%).

Changes varied from requests for new data points up to those with a larger impact, such as rethinking bed numbers because of changing demand following the implementation of payment by results. The cost of the changes varied – for example across the public sector the cost of supplying and fitting an electrical socket varied from £302.30 to £30.81.

In 2006, the capital cost of changes was approximately £164m, around 1% of the unitary charges paid to PFI contractors in 2006/07. One in five projects had introduced changes that had been considered in their original scheme.

The NAO said it was likely they paid more to implement the changes later than if they had been included in the original construction phase.

The NAO review came as the Scottish government announced plans to replace the PFI. It proposes to establish the Scottish Futures Trust, a not-for -profit body that would use public and private capital for infrastructure investment.