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Revealing results of research into the transparency and accountability of 21 road and hospital PFI contracts - with annual costs of £210 million in each sector - were presented today by ACCA (the Association of Chartered Certified Accountants) at a conference in London.

The ACCA-commissioned research - Evaluating the Operation of PFI in Road and Hospital Projects* ­ analyses the financial reporting of 21 PFI projects (eight roads and 13 hospitals). Several difficulties when accounting for PFI are revealed - not least the differences between public and private sector accounting treatments and, therefore, the actual amounts reported for PFI payments, revenues, assets and liabilities. This makes it difficult to measure the financial performance of the contracts, which, in turn, creates problems for their monitoring and evaluation and raises serious concerns about their public accountability.

The report also makes recommendations for the improvement of current practices by, for example, ring-fencing payments to prevent money intended for maintenance being lost in the event of private sector failure and, introducing contingency plans to guard against the possibility of private sector default.

Issues raised in the report and more were discussed at ACCA's 3 November event - Accounting for PFI projects: whose risks? Whose assets? Those at the forefront of PFI projects, regulators and other experts in the field addressed the audience, including: David Finlay and Peter Morgan of the National Audit Office; David Loweth of the Accounting Standards Board and Norman Lamb of the Treasury Select Committee.

Andy Wynne, Head of Public Sector Issues at ACCA, said: "ACCA's research raises serious questions about the accountability of PFI projects, in particular the ability of current accounting methods to provide adequate transparency.

"A major issue is that PFI debts and assets are kept off the Government's balance sheet. The NAO reports that the future value of PFI payments to which central government is committed is over £105 billion - around a third of the current level of Government debt. Given this extensive commitment, PFI assets and liabilities should, in many cases, be included on the Government's balance sheet. There should not, for example, be a repeat of the recent situation where the NAO successfully argued with HM Treasury that it would be embarrassing if its refurbished Whitehall building was to appear on neither its own balance sheet nor that of the PFI contractor."

Wynne added: "The many issues raised in the research must be addressed as a matter of urgency, to ensure that the costs, affordability, value for money and overall effectiveness of PFI projects can be accurately established. Today's event will kick-start this essential process."

*The ACCA commissioned research, Evaluating the operation of PFI in road and hospital projects, was conducted by Pam Edwards and Jean Shaoul, University of Manchester.

For further information contact:
June Deasy, Public Relations Manager 020 7396 5751/ 07736 800393

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