HM Treasury News Release
187/98
12 November 1998
GEOFFREY ROBINSON ANNOUNCES SECOND REVIEW FOR THE
PRIVATE FINANCE INITIATIVE
A review of the Private Finance Initiative (PFI) and Public
Private Partnerships (PPPs) is to be conducted in advance of the
expiry of the Taskforce's mandate in late summer 1999, Paymaster
General Geoffrey Robinson announced today.
Sir Malcolm Bates, Chairman of Pearl Group, has been asked to
examine the progress made in the delivery of PFI and PPPs by this
Government and in the light of this new experience, recommend any
changes to the existing arrangements which could further improve
the government's approach to PPPs.
In launching the Review, Mr Robinson said:
"We have made great strides with PFI in the past year. But we
must continue to improve, identify and develop new opportunities
and partnerships with both the public and private sectors. As
well as improving value for money to the taxpayer this will
ensure the delivery of a higher sustainable level of public
sector investment.
"I want to see such partnerships extended beyond PFI. We need
to exploit all commercial potential and spare capacity in public
sector assets through a sensible balance of risk and reward. Sir
Malcolm Bates' first report reinvigorated PFI and I very much
look forward to reading the outcome of his second review."
The first review under Sir Malcolm Bates proposed the creation
of the Treasury Taskforce to help central government departments
and agencies road-test significant projects for their commercial
viability. The Treasury Taskforce's two-year life comes to an end
in late summer 1999. The Government wants to look ahead and
ensure that the best possible arrangements are in place for a
smooth transition at that time.
Sir Malcolm Bates will commence his review immediately and
complete his work by mid February 1999.
TERMS OF REFERENCE
The purpose of the review is to make recommendations as how best
to manage the execution in the public sector of sound PFI and
Public Private Partnership deals. The review will be guided by
the Government's objectives of introducing the best of private
sector skills and practices into the management of PFI and PPP
deals in order to improve value for money for the taxpayer, and
of stimulating a steady flow of PFI and PPP deals in order to
contribute to a higher sustainable level of investment in public
sector infrastructure.
It will be conducted by Sir Malcolm Bates, Chairman of Pearl
Group and Chairman of Premier Farnell. He has been asked to
report by mid February 1999 to the Paymaster General.
His review will address:
(i) the steps taken by Government departments and agencies to
implement the recommendations contained in the first review of
the PFI by Sir Malcolm Bates;
(ii) the progress made and the lessons learned in the
introduction of private finance into public sector infrastructure
investment since the formation of the Treasury Taskforce;
(iii) the respective roles and effectiveness of the Treasury
Taskforce, Department Private Finance Units and procurement teams
in Government departments and elsewhere in the public sector in
advancing PFI and PPP deals;
(iv) the extent to which the use of private sector skills and
best practices have been adopted in the public sector in the
execution of PFI and PPP deals;
(v) how best to plan for, develop and manage the future delivery
of PFI and PPP deals in the public sector;
(vi) whether a lack of skills and resources in the private or the
public sectors is a barrier to progress in bringing forward and
executing PPP deals to give effect to the new Wider Markets
guidance; and
(vii) what, if any, changes to existing institutional
arrangements should be made following the expiry of the life of
the Treasury Taskforce to achieve the Government's objectives of
introducing the best of private sector skills and practices into
the management of PFI and PPP deals in order to improve value for
money for the taxpayer still further, and of stimulating a steady
flow of PFI and PPP deals in order to contribute to a higher
sustainable level of investment in pubic sector infrastructure.
NOTES TO EDITORS
1. Sir Malcolm Bates' first review into the PFI made 29 separate
recommendations to improve the PFI which were accepted in full
by the Paymaster General on 23 June 1997. All recommendations
have since been implemented.
2. The principal institutional change recommended by the first
Bates' review was the creation of the Treasury Taskforce, a team
of policy and projects experts which acts as the focal point
across Government for PFI. The projects Taskforce, under Adrian
Montague, a former investment banker who was appointed to the
post on 14 July has a limited life of two years.
3. The Treasury's new Wider Markets guidance was announced on
26 October 1998.
4. Sir Malcolm Bates' biography is available for the media on
request from the Treasury press office (0171 270 5192).
5. Contributions to this review - to be kept to a maximum of
side two sides of A4 where possible - should be sent to Ross
Newby, HM Treasury, Parliament Street, London SW1P 3AG (0171 270
5518) by 4 December 1998 for onward transmission to Sir Malcolm
Bates.
6. PFI deals augment public sector investment and stand
alongside conventionally funded capital spending. The
Procurement Review announced in the Pre-Budget Report covers all
forms of public sector procurement, and will take account of any
recommendations made in the second Bates Review in arriving at
its recommendations insofar as germane to the PFI.
7.Details of the Procurement Review will be announced shortly.
8. If you access to the Internet you can find this news release
and other treasury material at http://www.hm-treasury.gov.uk and
the Treasury Taskforce's website is at http://www/hm-treasury-
projects-taskforce.gov.uk
# = pounds sterling