Committee questions whether PFI funded project delivered value for money
Date: 10 December 2014
Reference: PAC 03/14/15
In a report published today, The Assembly’s Public Accounts Committee has questioned whether a major Private Finance Initiative (PFI) project delivered value for money. The Report on The Future Impact of Borrowing and Private Finance Commitments and Belfast Metropolitan College’s Titanic Quarter PPP Project, examines the use of PFI in the development of the Belfast Metropolitan College Titanic project and wider issues around the transparency of PFI projects.
Chairperson of the Public Accounts Committee, Michaela Boyle MLA said: “We can all agree that the new Belfast Met campus is a beautiful building which has won awards for its design and is delivering a high level of staff and student satisfaction.
“Nevertheless, there were very serious shortcomings in the way the project was managed. The Department for Employment and Learning (DEL) paid £20m of the £44m capital cost up front. The Belfast Met was the largest and most expensive further education public/private funding project ever undertaken.”
The sale of the properties for £5.6 million left the Department to pick up a shortfall of £14 million. The Department contend that, as the surplus properties were removed, they should not form part of the value of the money assessment of the Titanic Quarter project. However the Committee is clear; the opportunity cost of making up the £14 million shortfall must be factored into any realistic value for money assessment of the project.
It was also felt by the Committee that the preferred bidder, ICL, was given its preferred bidder status prematurely and this enabled them to dictate the pace and outcome of negotiations with the college. Consultancy costs on the project were also allowed to overrun considerably from £300k to £1.5million.
Michaela Boyle said: “There are a number of issues that we believe need to be addressed. It is vitally important now that a comprehensive Value for Money Assessment be carried out which factors in all costs of the project. At the same time, we are encouraged that the College has significantly improved its financial management under the current administration.”
As part of its consideration of wider issues, the Committee is calling for greater transparency of long-term PFI commitments.
The Committee Chairperson Michaela Boyle said: “While there are some serious questions to be asked on our long term PFI commitments, we welcome an undertaking from The Office of the First Minister and the deputy First Minister (OFMdFM) to improve transparency around this.
“While we are pleased to see OFMdFM taking this forward, we will be keeping the issue of Private Finance Initiatives on our radar. It is crucial that we ensure that value for money is obtained and that the public know how and where its money is being spent.”