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NAO: ''Keep closer eye on PFI projects''

The government needs to make sure that it gets value for money when it commissions future projects under the private finance initiative (PFI), a report by the National Audit Office has said.

'Financing PFI projects in the credit crisis and the Treasury's response' said that under the previous government the Treasury had done well setting up an Infrastructure Financing Unit because this reactivated the lending market for private finance projects during the credit crunch.

However, the NAO said, while the extra costs for projects in 2009 represented value for money in the short-term and achieved the aim of stimulating the economy, the Treasury should not presume that continuing the use of private finance at current rates would still provide value for money and it made sense to review each individual project and to apply tighter criteria.

NAO head Amyas Morse said: "By introducing an Infrastructure Finance Unit, the Treasury helped reactivate the market and prevent the stalling of many government projects. During 2009, the cost of finance built into the PFI programmes at that time was value for money, but there is no guarantee that it will remain that way.

"Now that the market is providing finance again, a project by project review should be carried out using stricter criteria, to establish the most appropriate funding methods."