Private finance projects and off-balance sheet debt

Download or read book Private finance projects and off-balance sheet debt written by Great Britain: Parliament: House of Lords: Select Committee on Economic Affairs and published by The Stationery Office. This book was released on 2010-03-17 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: This report recommends a reform of the way financial liabilities arising from private finance projects (PFPs) are treated in public accounts. The Government should publish figures for total PFP liabilities as a separate item alongside figures for public sector net debt. The Committee believes that PFPs' whole life approach to projects, in which the private contractor is responsible for long-term maintenance as well as construction, can have benefits and could be adopted more widely in public procurement. PFPs' scope could be broadened to include the transfer of further risks to the private sector, including those of some mainstream services (for example, in the health and education sectors), rather than just ancillary services as at present. The report also deals with the growth in the secondary market for PFPs where investors sell on their stake in a project, in many cases once the construction period of that project has been completed. The Committee is concerned that the ability of construction companies to do this might negate one of the key advantages of PFPs over traditional procurement - that the developers have an ongoing responsibility for maintenance and are therefore motivated to use high quality materials and construction processes. The Committee queries some aspects of the value for money tests public authorities are required to undertake when comparing estimates of costs for PFPs with traditional procurement.