I do not have a tally of the number of complaints which the Department has received about private finance initiative contracts, but I will write shortly to the hon. Lady with this information. We have been working consistently to improve the delivery of operational private finance initiative contracts in response to problems that have been brought to our attention. We have, for instance, provided additional support directly and through Partnerships UK for those schools and authorities which had contracts with Jarvis plc., and where there were undoubtedly exceptional problems because of the financial difficulties of that firm.
Ensuring satisfactory delivery of the services included in a private finance initiative contract is the responsibility of the authority which is signatory to the contract. However, the Department is always happy to advise and support where there are individual problems that cannot be resolved locally. It also continues to work with Her Majesty’s Treasury and with other Departments to improve the delivery of public services through private finance initiatives. This is done by a process of continuous improvement of the contracts, and also by providing additional support through the recently formed Operational Task Force. This will support and intervene on wider structural issues like benchmarking, market testing, payment mechanisms and variations.
The Department published last autumn a study on "Post-Signature PFI Contracts", commissioned from Partnerships UK, which is available through:
This shows that overall the schools and authorities surveyed are satisfied with the services which are delivered through their private finance initiative contracts. However, it also reports some areas for improvement, and makes a series of recommendations which the Department accepts and is acting upon.
One area for improvement is the high level of resources some schools and authorities have to devote to maintaining their contracts. In March, Her Majesty's Treasury published "PFI: Strengthening Long-term Partnerships", which supported our own findings. Among its recommendations are that authorities should plan to give a proper level of resources to operational contacts. It also announced the formation of a PFI Operational Taskforce with cross-government backing, including from the Department, to provide greater support to projects that are already operational.
The Department will continue to work with Her Majesty's Treasury and with authorities and schools, directly and through Partnerships UK, to support them and ensure that schools benefit as intended from their private finance initiative contracts.
All private finance initiative contracts include mechanisms for ensuring that the private sector partner delivers the services which are contracted, with financial penalties imposed where this does not happen. Contracts are made between individual authorities and the private sector partners, and the Department does not monitor them.
In autumn 2004, the Department published a "Post-signature Review" of schools private finance initiative projects which it had commissioned from Partnerships UK. This showed that overall there was satisfaction with the quality of buildings and services delivered by the operational contracts at the schools and authorities surveyed, but it also highlighted some areas where improvement could be made, and made a series of recommendations which the Department accepted and has acted on. Many of the lessons which this survey highlighted had already been included in more recent contracts. This survey is available through:
These findings were also borne out in a further study which Her Majesty's Treasury published at the time of this year's Budget, "PR: Strengthening the Long-term Partnerships". This paper included setting up an Operational Task Force to support and intervene where there are major issues.
Private finance initiative contracts are made between local authorities and the private sector partner, following a due procurement procedure which includes consideration of design and value for money. Design details are decided locally, and the local authority has responsibility for ensuring that the private sector partner delivers to the output specified in the contract. The private sector partner has of course the responsibility for fully maintaining and repairing the building throughout the length of the contract. Contracts include mechanisms for financial penalty where the private sector partner does not deliver to contract.
We work closely with the Commissioners for Architecture and the Built Environment and other bodies with design interests. We have recently published Design Quality Indicators for school buildings, after consultation with relevant bodies. We strongly encourage all local authorities to use these resources.