Housing Revenue Account Private Finance Initiative - New Build
The Association of Chartered Certified Accountants (ACCA) is pleased to have this opportunity to comment on the proposal to allow local authorities the financial freedom to include new build in PFI projects. These comments have been prepared in consultation with members of the ACCA's Public Sector Technical Committee, a group of experienced accountants working in the public sector.
While we welcome the proposed relaxation of the regulations which would allow local authorities to include new build within PFI projects, we are nevertheless concerned with the very limited flexibility which will be allowed for local authorities in future. The decision to abolish the Local Authority Social Housing Grant from 1 April this year will make this situation worse. We do not believe that PFI always provides the most efficient method of financing public sector projects. Public sector organisations should be given real choices on the most efficient approach to the procurement of public sector capital assets. Only in this situation will the organisations be in a position to choose the approach which is most likely to provide value for money.
One of the principles of the Government's reform of public services is that the diversity of provision of such services should be encouraged. We consider that the proposals will be contrary to this principle as the only way in which local authorities will be able build new council houses will be through the use of PFI contracts.
Last year ACCA undertook a survey of the opinions on PFI of our members working in the UK public sector. Only one percent of the respondents to this survey strongly agreed that PFI generally provides value for money whilst well over half of the respondents disagreed with this statement. The survey also showed that most public sector accountants believe that public sector organisations are prevented from achieving value for money as PFI is the only available option for obtaining much needed capital investment in public services.
Finally, we were disappointed that respondents for the current consultation exercise have only been given four weeks in which to respond. The Government's Code of Practice on Written Consultation states that, "Twelve weeks should be the standard minimum period for a consultation". The Better Regulation Task Force issued its annual report earlier this week which indicated that 80% of government consultations now comply with the recommendation for a 12 week consultation period.