CHRIS WILSON, 4ps
Chris Wilson, an expert in complex transactions in the private and public sectors, became Executive Director of the Public Private Partnerships Programme (4ps) in 2002. 4ps guides local authorities negotiating procurement in the new world of PFI

DAVE PRENTIS, Unison
Dave Prentis has spent his career representing workers’ interests. He became General Secretary of UNISON, the public service workers’ union, in 2001, and sits on the Labour Party economy commission and policy committee. UNISON is one of the loudest voices in the PFI debate

Is PFI (Private Finance Initiative) the salvation of public services or a cynical distortion of public finance?

Chris Wilson: Audits have found that 88% of PFI projects were delivered on or before time with no cost overruns borne by the public sector. Meanwhile, 70% of comparable traditional projects were delivered late, and 73% over budget.

Dave Prentis: PFI is a build-now, pay-later concept that keeps the cost off the public balance sheet, but is like paying for your mortgage with a credit card. Claims that 
PFI outperforms conventional procurement are simply not borne out by the facts. You only have to look at the Jarvis projects, at National Air Traffic control or the Passport Agency to know that PFI is prone to time and cost overruns.

So what’s the problem: the public sector or PFI?

CW: Many public authorities still lack resources and capacity to manage such complex projects. We need to extend the national ‘programme management’ approach seen in Building Schools for the Future and the Waste Infrastructure Development Programme. These programmes standardise the procurement and contracting process, managing public sector risk at national level. They build commercial, project management and risk management skills in the public sector, ensure economies of scale, and target both PFI and traditional expenditure to the areas of most impact. They also enable the public sector to ‘manage the market’ – leverage their collective spending power and balance construction supply and demand.

DP: Our original predictions have been borne out: that PFI would not be value for money, that private companies would reap huge profits for little or no risk and that it would store up problems for the taxpayer of the future. And the costs of PFI are still rising rapidly, partly due to construction inflation, but also because of a lack of competition between PFI providers: for example, ten construction companies have 51% of the market by capital value.

Should PFI finances be more transparent?

DP: Yes. The obvious response would be an independent and thorough analysis of PFI. It may already be too late for existing PFI projects, but the public deserve the truth about whether the vast sums of money being spent on PFI represent good value for money.

CW: Major public-spending programmes such as PFI should be subject to constant independent and thorough analysis – the National Audit Office (NAO) has published many such reports on PFI.

Has PFI succeeded in transferring risk to the private sector?

CW: Contractual provisions such as the Standardisation of PFI Contracts are rigorously and consistently applied and have been demonstrated to be very effective in protecting the public sector from risk.

DP: PFI failures show that it’s the public sector that picks up the tab when things go wrong. Contrary to government claims, PFI companies have taken on little risk for huge profits, with re-financing deals leading to even higher returns for private investors. I would like to see the NAO examine exactly which risks are transferred and at what cost.

What should frontline workers expect under PFI?

DP: It became clear early on that PFI promised big profits for private investors, but poorer pay, pensions and job security for the workforce. That is why UNISON has followed a twin-track approach: opposing PFI in principle while getting the best protections for members being transferred.

CW: The government has introduced a comprehensive range of measures to protect the terms and conditions of transferred staff, as well as fairness for new workers taken in local authority service contracts. In fact, PFI will only be used where protection of workforce conditions is in place. 4ps has issued guidance and standard drafting on workforce matters for all such local authority contracts.

Which PFI project do you think has the most to teach us?

CW: Nottingham Express Transit light-rail system is a good example of where PFI has been used to deliver new physical infrastructure that improves people’s lives. On a daily basis it is carrying some 27,000 passengers and surveys show high satisfaction levels among users.

DP: A project like the Queen Elizabeth Hospital in Woolwich, [south London], for example, faces insolvency because, according to the auditors, PFI is costing an additional £9m per year compared with conventional procurement.

Compiled by Jane Burrows

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