Private sector deals survive review

THE TREASURY'S review of the flagging Private Finance Initiative has recommended that government departments should prioritise all their PFI pathfinder schemes to increase the chances of projects reaching the marketplace.

The review was ordered by paymaster general Geoffrey Robinson and led by Malcolm Bates, chairman of Pearl Assurance. All of Mr Bates's recommendations, aimed at simplifying the initiative and speeding up PFI deals, have been accepted by Mr Robinson.

Philippa Roe, head of education and employment at the Private Finance Panel Executive, the government's PFI advisory body which is to be wound down, says the call on departments to prioritise their existing projects should, however, have little impact on higher and further education projects.

"Compared to some other sectors, higher and further education is in pretty good shape. It has been able to avoid the pitfalls of mandatory testing of schemes which has created an unwieldy number of projects in other sectors such as health. I think the Treasury was very concerned about this," she said.

The review will have no impact on institutions close to clinching a deal with the private sector, she added. These include University College London's Pounds 30 million Crucible building; a Pounds 2.5 million project to build 155 residential units at Falmouth College of Arts and the Pounds 100 million teaching and research facility planned by King's College, London and United and Medical Dental School.

Margaret Deacon, finance director of Brighton University, said she would have preferred the Treasury to have produced a wider strategic review of public-private partnerships: "For higher education it's not just a matter of PFI. We take part in a whole range of activities from outsourcing through to traditional tendering."

She hopes that the review will not affect the newfound interaction between higher education and the private sector. "To a great extent government has given higher education freedom to achieve its own objectives. It would be unfortunate if new arrangements reduced this."

One of the recommendations on the Bates review is a Treasury task force to "vet" PFI projects before the procurement process begins. Paul Watson, PFI expert at property consultants Grimley International, said this could reduce the number of "fringe" projects of dubious merit being promoted in the sector.