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Public Finance Contracts

Volume 455: debated on Tuesday 16 January 2007

To ask the Secretary of State for Work and Pensions what the total liability to his Department would be in circumstances of immediate termination of all (a) public/private partnerships and (b) public finance initiative contracts. (109298)

The Department has a single private finance initiative contract entered into in 1998 with Land Securities Trillium (LST) for the supply of serviced accommodation. This contract, known as the Private Sector Resource Initiative for the Management of Estate (PRIME), was expanded in 2003 to include the former Employment Service estate.

The Expanded PRIME Contract provides for the termination of the contract during the 20-year operating period, by either the PRIME contractor or voluntarily by the Department. The contract provides the Department with safeguards in respect of the accommodation it occupies and services it is receiving at the time of termination. The Department does not have any direct liability if termination is by the PRIME contractor. However, should the termination by the PRIME contractor be as a result of the Department allegedly being in breach of contract, a compensation payment might be sought by LST.

If the Department voluntarily terminates the contract it will incur a number of liabilities, including potential redundancy payments for LST’s sub-contractors, the unitary payments for a prescribed period and compensation for early termination. The level of liability would be calculated at the time of contract termination and be subject to negotiation and financial analysis of the Department’s liability.

The Department has no public/private partnerships.