PFIs and the MoD

Discussion in 'The Intelligence Cell' started by meridian, Dec 2, 2009.

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  1. meridian

    meridian LE Good Egg (charities)

    As we all know the MoD is very keen on PFI's. In theory there is nothing wrong with outsourcing non core business, converting capital into revenue costs and spreading those costs out over a long period. Enteprise does it all the time and when all said and done its simply a lease deal with extra bits.


    Some of the early PFI's are coming to the end of their term

    The UK economy is in the toilet and may affect our credit rating

    Credit (and we are talking big numbers) is less available

    Credit will be more expensive


    I wondered what others think, what is the future of PFI's under a possible future Conservative government, have they been good value for money?
     
  2. Meridian,

    The reason the MoD was keen on PFI/PPP was that it got a lot of capital expenditure off the Balance Sheet and avoided losing a lot of budget due to Cost of Capital Charge (CoCC) under Resource Accounting and Budgeting (RAB).
    From 2010 (I think), due to new European accounting rule changes, PFI charges now have to be shown on the Balance Sheet, so we should see less of them, and no, they are not generally good value for money if any sort of change is made to the terms and conditions etc. OK for commercial enterprises, not so good for military activities.
     
  3. I doubt very much if, at the end of each contract, the MoD saved as much money as the Private Sector made in profit! The Private Sector have had a field day with Consultants, Lawyers, Banks, Lobbyists, Accountants et al, having their expensive to run noses in the proverbial trough.