Investigation into the rescue of Carillion’s PFI hospital contracts
Carillion going into liquidation left two new hospitals unfinished. The projects will now be completed with public finance.
17 Jan 2020
Carillion going into liquidation left two new hospitals unfinished. The projects will now be completed with public finance.
Lessons from the large body of experience of using PFI can be applied to improve other forms of procurement. Government should also do more to act as an ‘intelligent customer’ in the procurement and management of projects.
“These are complicated deals, worth a great amount of money and spanning a long period into the future. I welcome the fact that there are prospects for improvement to the Tube. But in the face of the inevitable uncertainty about what the next 30 years will bring, only time will tell whether these prospects are fully realised and, therefore, whether the eventual price that the taxpayer pays is worth it.”
“These are complicated deals, worth a great amount of money and spanning a long period into the future. I welcome the fact that there are prospects for improvement to the Tube. But in the face of the inevitable uncertainty about what the next 30 years will bring, only time will tell whether these prospects are fully realised and, therefore, whether the eventual price that the taxpayer pays is worth it.”
“It is difficult to imagine the scale of the consequences for the economy and society if major banks had been allowed to collapse. The Treasury was justified in using taxpayers’ money to safeguard savings and stabilise and restore confidence in the financial system.
“But the big question is what all of this will eventually cost the taxpayer. This will take time to answer. What we do know is that how the eventual sale of RBS and Lloyds is managed will be crucial to protecting the public interest. The structure of the UK banking system has changed beyond recognition. When it comes to selling its stakes in the banks, the government has to be mindful of the proceeds for the taxpayer but also of the implications for competition in the UK market, so that customers get a fair deal.
“As the crisis begins to subside, lessons must start to be learned. The authorities need to put formal arrangements in place to evaluate the effectiveness of the support provided to banks in order to inform future policy makers.”
“PFI deals have proven to be flexible to change and, when considering that these deals will span a number of decades, that is essential. Now that an increasing number of PFI deals are in their operational stage, and change will inevitably be needed over time, the public sector has to raise its game to get a better outcome and use the guidance and resources available, particularly as changes made to operational projects have not always provided value for money.”
We have published this model to provide guidance to Departments on HMT’s and NAO’s expectations of how they should manage their programmes involving PPP and PFI projects.
“As PFI deals are long term arrangements it is essential that authorities and contractors work together as partners to achieve successful outcomes.
“The main elements of a successful relationship between the public and private sectors are to adopt a partnership approach supported by the right contractual framework, to have the right skills mix present at the right time, and to make the partnership work in practice.
“My report will help both authorities and contractors to achieve good relationships on PFI projects to assist the delivery of public services procured under the PFI.”
“Shortcomings in the early stages of the project put the MOD in a position where the operational pressures of an aging fleet and the need to maintain the vital air bridge restricted its ability to deliver a solution which achieved value for money.
“Despite taking five years longer than planned to sign a contract, the MOD’s progress in delivering the Future Strategic Tanker Aircraft project has improved since contract signature, and the project is meeting its delivery milestones. But there is more work for the MOD and its suppliers to do to get the best out of the deal.”
” MOD expects to secure significant benefits from this PFI deal which will help its accommodation arrangements in London. This was a large and complex project and my report sets out a number of important learning points relevant to other PFI deals under development.”