Friday, February 16, 2007

PFI Fudge Costs Plenty

How auditors see themselves

It's just possible you may not yet have set aside the time to study it, but as usual, it contains the name and shame list of central government organs that failed to produce timely and accurate accounts during the year. All our old favourites are there, from the old monsters of waste like DWP, HMRC, and the Home Office, right down to those rubbish NuLabour inventions like NHS Direct and the now-deseased Assets Recovery Agency.

The Report also notes that the whole issue of accounting for PFI liabilities remains a big concern:

"Obtaining good quality services at value for money should, of course, be the major incentive of PFI deals. But in addition to that objective, there are also more practical incentives for public sector bodies to structure projects so that the assets (and the corresponding liability to pay for the asset) are not recorded on their balance sheet. This has been particularly the case in the local authority and health sectors. For instance, in the local authority sector, ‘PFI credits’ allowing projects to go forward have been conditional upon the local authority obtaining off balance sheet status for the project. These incentives may present a temptation to public sector bodies not only to diverge from good accounting practice, but also to structure contracts so as to achieve off balance sheet treatment rather than the best possible value for money."

As always, the NAO's language is understated, but let's be quite clear what they're saying: we taxpayers have been put in hock for years to come on poor value PFI deals simply so Gordo could engineer a way round his own Golden Rules.
So there! It isn't just BOM wittering about a problem that doesn't exist.

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