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Poor value PFI deals 'must be axed'

A spending watchdog has told the Government it must cancel or renegotiate PFI contracts if they are not good value.

The National Audit Office also recommended that public servants work on making sure they are not beaten to the best deals by private sector workers and that they wield the huge buying power of the state to get better terms.

The watchdog has released a report that lays out the lessons to be learned from how PFI projects have worked.

It said there must be “robust, impartial scrutiny of the business case” every time a PFI scheme is being considered and suggests the Government might find them more tempting as it seeks to save money.

It said: “The use of private finance has brought useful disciplines and a framework of support which are applicable to other forms of procurement. Our recent reports on PFI and other major projects have, however, highlighted that Government needs to act as a more intelligent customer in the procurement and management of projects.

“Value for money will be improved through officials being proactive in: collecting data to inform decision-making; ensuring they have the right skills; establishing effective arrangements to test, challenge and, if necessary, stop projects; and using commercial awareness to obtain better deals.

“In the current climate, PFI may not be suitable for as many projects as it has been in the past.

“The lessons from PFI can, however, be applied to improve other forms of procurement to help Government achieve its aim of annual infrastructure savings of £2-3bn.”

The NAO said the Government had tried to improve commercial skills among public servants since 2009 but “the public sector’s skills are generally not as well developed as their private sector counterparts, which puts value for money at risk”.

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