THE body established to promote the Private Finance Initiative should be abolished because it has failed in its objectives, according to the Centre for Policy Studies (CPS).

Partnerships UK “lacks logic” and “adds confusion and contradiction” to public sector procurement, says the right-wing think-tank, which is calling for a reorganisation of the PFI process. It says staff of Partnerships UK should be redeployed in special PFI units or in the spending departments or in the private sector.

Partnerships UK, which is 51 per cent owned by private sector companies including British Land, Serco and the troubled PFI group Jarvis, has been no stranger to controversy since it was created three years ago. The group, whose chief executive is James Stewart, the former banker, has raised eyebrows because its owners are often beneficiaries of multimillion-pound PFI contracts.

One of its aims is to promote private-sector involvement in PFI projects, but the CPS report is critical of its method of using public funds for PFI projects that financial markets are not willing to support.

“If capital markets are not prepared to advance finance for a project, that is almost certainly because they believe it is not sustainable. Public money should not be used to prop up projects which the private sector does not believe will succeed,” says the report.

A Treasury spokesman said: “Partnerships UK is playing a valuable role in supplying private-sector expertise and skills to the public sector and helping to deliver value for money PFI projects as evidenced by the setting up of Partnerships for Health and Partnerships for Schools.”

Big PFI contractors recently called for the organisation to be beefed up, rather than scrapped.

The report comes as problems at Jarvis, a 1 per cent shareholder in Partnerships UK, have highlighted problems inherent in PFI.

Jarvis, which is on the brink of bankruptcy, has a significant interest in the PFI market which it is now trying to sell to other investors. In the meantime, work on many of its schools and other projects has stopped.

The CPS says that with one in eight PFI schemes failing to deliver facilities on time and on budget, Gordon Brown should be forced to divulge the extent of government spending committed to PFI projects during the next 25 years.

According to the Treasury, the taxpayer will pay £123 billion into PFI contracts between now and 2030.

But the CPS says the total amount the Government owes could be higher because the Treasury does not show liabilties beyond 25 years. Many PFI schemes run for 30 years, and some 60 years.

“Greater transparency in government liabilities for PFI projects must be pursued,” says the report. “At present there exists no single figure covering all PFI, PPP and other contingent liabilties which go to make up the total expected off-balance sheet exposure,” says the report. Other CPS recommendations include the abolition of the public-sector comparator, a test used to gauge whether public-sector procurement or PFI is best.

The report also demands that lawyers and bankers be required to tender for advisory contracts at the beginning of every PFI contract in an effort to bring down increasing professional fees. Another recommendation is that PFI should also be restricted to particular sectors where it has had proven success, for example roads and prisons.

The CPS suggests that specialist professional PFI units be established within major spending departments such as the Department of Health and the Ministry of Defence.

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