Press Releases

Taxpayer Gains £4 Million From PFI Success - Peter Gershon

Peter Gershon, Chief Executive of the Office of Government Commerce (OGC), today announced significant gains to the taxpayer as a result of successful delivery from the Private Finance Initiative.

Successful refinancings of the Calderdale Hospital PFI Project and the MOD's Joint Services Command and Staff College PFI Project have produced £4 million of gains for the taxpayer. The refinancings are a result of the successful completion of the building phase of the projects under the Private Finance Initiative.

These gains demonstrate the success of the concept of partnership in public services, with the gains divided between the public and private sector partners.

These refinancings are in accordance with the voluntary Code of Conduct launched by the OGC in October this year. The code has been widely accepted by PFI contractors, providing the public sector with 30 per cent of any gains from the refinancing of historic PFI projects

Peter Gershon, Chief Executive of the OGC said,

"This is good news for the taxpayer now, and good news for the delivery of public services. These gains are possible because PFI contractors have delivered facilities to the public sector to time and to budget. PFI continues to be an effective acquisition tool, helping the Government meet its delivery agenda."

"The Code demonstrates that both the public and private sectors understand that PFI rightly demands high standards of public accountability, and that both parties are committed to this."

These refinancing gains and the Code represent an excellent deal for the public sector. The risk of realising these gains lies with the private sector in the construction phase of the projects.

Future deals will be covered by the new guidance on Standardisation of PFI Contracts, providing a 50 per cent gain for the public sector.

Notes to Editors

1. A total of over 500 PFI projects have been signed to date. Refinancings of PFI projects typically occur after the construction phase of a project has been successfully completed. After this stage the private sector's risk is reduced and there may be opportunities for refinancing, thereby releasing future benefits. These benefits can only be accrued if the private sector has successfully delivered for the public sector.
2. Calderdale Hospital in Halifax was a newbuild and refurbishment project completed in April 2001.
3. The Ministry of Defence's Joint Services Command and Staff College opened to service personnel in August 2000. This PFI contract is for the provision of academic training and support services and a newly built college.
4. Established in April 2000, the OGC was set up to act as a catalyst in procurement issues and to work with civil departments to achieve best value for money in their commercial activities. Responsible for civil central government procurement policy and best practice including Construction, Property Management, IT, the Private Finance Initiative (PFI), supplier relations including opening government contracts to SMEs, e-commerce including the Government Procurement Card, the Gateway Review Process, OGCbuying.solutions, including the Government buying catalogues, G-Cat and S-Cat and developing strategic procurement partnerships with the private sector.

Press Enquiries:

James Worron

OGC Press Office

Tel: 020 7271 1454

E-mail: James.Worron@ogc.gsi.gov.uk