New PFI code has 50 signatories

As it strives to extract better value for money from PFI deals, the UK government last week introduced a new code of conduct binding public and private parties.

A total of 50 public and private organisations at the end of last week signed up to a new voluntary code of conduct that will help define how savings are made from public-private partnership (PPP) and Private Finance Initiative (PFI) deals. 

The code, produced by HM Treasury, is effectively a new ‘best practice’ guide for the likes of investors, lenders, construction firms and facilities management providers.

Among those private organisations to have endorsed the initiative are Balfour Beatty Investments, Equitix Group, HSBC Bank and Serco. From the public side, the Cabinet Office, Department for Education, the Home Office and the Ministry of Defence are among those to have put pen to paper.

The code sets out eight key commitments for private sector parties and another eight for public bodies to encourage a better relationship between the two sides. Pledges include having a single point of contact for all parties on a project and setting out how efficiency savings will be driven from the top to bottom of organisations.

The code also includes various transparency guidelines including updating partners on day-to-day costs such as consumables and, when appropriate, any changes in ownership structures.

The launch of the code is the latest step in the government’s push to cut the cost of infrastructure delivery. It claims that the existing Operational Savings programme has already achieved more than £1.5 billion (€1.8 billion; $2.4 billion) of savings in the last couple of years.

“The work on Operational Savings, and the code itself, are further examples of how the government is working with the private sector to drive down the cost of infrastructure in the UK so that we can invest where it’s most needed,” said Danny Alexander, Chief Secretary to the Treasury, in a Treasury statement.

The same statement said that the list of organisations signing up to the code would be updated every two weeks and that “widespread support from the market and public sector is expected”.

In December last year, the Treasury introduced Private Finance 2 (PF2), effectively a refined version of the PFI framework which aimed for more transparency and better value for money. It includes the disclosure of annual profits from deals, a running tally of liabilities to be recorded by government, less leverage, and the government taking an equity stake in projects.

The advent of PF2 followed strong criticism of the PFI framework from various politicians and Parliament’s Public Accounts Committee, which resulted in a review of PFI. The review stymied PFI deal flow for a long period, with deals only now just starting to move through the pipeline again.