Committee of Public AccountsWritten evidence from the Director General Public Spending, HM Treasury and Chief Executive, Infrastructure UK

HEARING ON EQUITY INVESTMENT IN PRIVATELY FINANCED PROJECTS ON MONDAY 20 FEBRUARY 2012

We are writing to make two corrections to the evidence we gave when we appeared before the Committee on 20 February.

In the context of Treasury’s approval process (Q 108), Ian Swales MP asked if there had been any cases recently where the Treasury had said, “No. We go the public route this time”?

Sharon White replied that the housing and waste sectors have been excluded from PFI for the future because public procurement has, on average, been better value for money. It was right that it was decided at the Spending Review 2010 that certain DCLG and Defra PFI projects would not go ahead. Funding did not proceed for a number of housing and waste projects, because these schemes were either unaffordable or not judged value for money. There was no blanket decision to use public procurement in these sectors.

In relation to housing, the decision was taken by DCLG to withdraw support for thirteen pipeline housing PFI projects, as following the ending of PFI Credits and of ring-fenced funding for these projects these schemes were judged to be unaffordable. Defra took the decision to cancel funding for seven PFI waste projects because, on reasonable assumptions, these projects would no longer be needed in order to meet the 2020 landfill diversion targets set by the European Union and consequently the projects were judged not to be value for money.

Secondly, the Chair of the Commitee asked whether the whole of the schools building programme is going to be funded through PFI (Q127). In response we responded that Academy schools are not funded through PFI. Since the hearing, it has come to our attention that Academy Trusts were (in addition to local authorities, dioceses and voluntary bodies) able to submit applications to the Priority Schools Building Programme, which is privately funded.

Schools, including academies, receive capital funding through a number of streams, including over £4 billion of basic need (pupil place) funding to local authorities over this Spending Review period and a mixture of PFI and capital investment legacy commitments for schools and academies that will build over 600 schools over this Spending Review period.

We are sorry that these errors of detail slipped into our evidence. We would like to assure the Committee that there was no intention to mislead.

29 February 2012