Anthony Hilton: Has PFI failed its screen test at the Treasury?

A lunch at Reform, one of our most productive think-tanks, focused on the private finance initiative, the contractual arrangement much favoured by Gordon Brown in which private-sector expertise and money was enlisted to build schools, swimming pools, hospitals and much else.

The theme of the discussions was bathwater and babies – the speaker who had a lifetime in the construction industry acknowledged the mistakes which had been made in PFI contracts – with the excess profits some private-equity houses made selling completed projects, the inflexibility and high cost in some of the contracts for running the facility once built and the difficulty of modifying specifications during the construction process being the most frequently cited. But these should not be allowed to obscure the benefits and in particular the fact there are hundreds of schools, hospitals and prisons in use today which would not have been built without it. So we should recognise the good bits of PFI and keep those, while getting rid of what we don't want.

None of this cuts much ice at the Treasury, however, because although it is conducting a review to determine whether PFI's flaws can be eliminated so it can have a future, the tone is pretty negative.

It is perhaps a mischievous suggestion but part of the reason may be that the Treasury itself is a PFI building, having been gutted and transformed in Gordon Brown's time under a PFI contract. This means the management of the facility remains in outside hands so Treasury staff have daily experience of the frustrations so familiar to many staff in schools and hospitals. Indeed, it may not help PFI's chances that a senior official involved with the review spent hours this year getting agreement for a television to be moved from one room to another so his team could watch the Budget and was then charged £450. He could have bought three TVs for less.

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