"Our examination of PFI hospital contracts indicates
that most are well-managed and achieving the value for money
originally envisaged. This is a positive result. In the longer
term, Trusts will need support from the Department of Health to
ensure that the current good performance is maintained, that
efficiencies are sought and that an appropriate share of benefit
comes back to the public sector."
Amyas Morse, head of the National Audit Office, 17 June
2010
The National Audit Office reports today that most PFI hospital
contracts are well-managed and the evidence indicates that they are
currently achieving the value for money expected when the contracts
were signed. There continue to be risks, however, to the long-term
value for money of these contracts.
Today's report, which focuses on the stage of the contract once
buildings are opened for use, not on the decision to use PFI as a
procurement route, suggests that most contracts are performing
satisfactorily or better and meeting the expectations of Trusts.
The cost and performance of services such as cleaning, laundry and
portering in PFI hospitals are similar to those provided in non-PFI
hospitals. While catering is on average slightly cheaper in PFI
hospitals, hospitals with PFI buildings spend more on maintenance
annually to keep the buildings to a specified high standard.
Today's report emphasizes the challenge involved in managing PFI
contracts. Most Trusts are managing their contracts well day-to-day
and understand the risks to value for money. However, risks remain
and, while many Trusts have recently increased the resources they
dedicate to managing PFI contracts, some Trusts are not devoting
enough resources. Twelve per cent (9 of the 76) operational PFI
contracts have no-one from the public sector assigned to contract
management.
It is likely that Trusts will be expected to make efficiency
savings over the next few years, but their ability to make savings
from their PFI contracts is very limited. Because Trusts pay an
index-linked fixed sum, it is difficult for them to make savings
without cutting back on services. Contractors who secure economies
of scale through managing multiple PFI contracts are rarely
required to share these efficiency gains with Trusts.
The Department of Health is responsible for helping Trusts
manage their contracts and, while good practice is spread among
Trusts, there is a lack of central data on the performance of the
PFI portfolio. The Department does not use the leverage over the
market it possesses from having 76 contracts in force. With more
information on Trusts’ projects, the Department could use this
leverage to update contracts on common issues or facilitate
performance and efficiency improvements.
Publication details:
HC: 68, 2010-2011
ISBN: 9780102965261