PFI - Lack of transparency around UK Government cost comparisons
If there is to be a meaningful consideration of public spending, greater transparency is needed.
The National Audit Office (NAO) state in their ‘PFI and PF2’ report (‘the report’) that ‘PF2 costs are around forty per cent higher than the costs of a project financed by government borrowing’. This is a significant claim and therefore it would be reasonable to expect the NAO to be open and transparent about the calculation of this figure, including any assumptions used to ensure a genuine ‘like for like’ comparison. However, other than providing a source, no detail is provided in the report.
This blogpost chronicles our difficulties in assessing the detail behind this claim. It highlights the lack of transparency available to sense-check some of the flagship statements that inform the opinions on PFI of both the general public and policy makers.
Dialogue with the public sector entities involved, in an attempt to get hold of the detail
The report itself does not provide any detail as to how the 40% figure is derived, other than saying a series of PF2 schools was the basis for the figure. In order to understand how it was determined, we sent in the following Freedom of Information Request to the NAO:
Under the Freedom of Information Act 2000, I would like to request the following information in relation to the 'PFI and PF2' report ('the Report') published in 2018:
The raw data used in making the comparison between PF2 costs and the public sector comparator in Figure 4 (page 18); and
The set of assumptions used in the composition of the same Figure 4 in the Report, including what is included within the scope of each of the PF2 example and the public sector comparator to enable a true like for like comparison.
While the NAO responded to the first point by providing a spreadsheet which contained the figures that could recreate the line graph in the Report’s figure 4, they noted in relation to the second point:
The following exemptions apply: Section 33 (public audit functions)...
We believe that disclosing this information under the FOI Act would be likely to prejudice the effective performance of our public audit functions going forward… Disclosure by the NAO of sensitive information beyond that required for audit reporting purposes would impair the provision of audit information in the future. It would reduce, if not cut off, critical information flows.
Given that the NAO were effectively telling us that the information we had asked for was not theirs to share, we decided to go to the source, which was the Department for Education. We asked for the same information, to which they replied:
Disclosure of the withheld information would prejudice or would be likely to prejudice the formulation or development of government PPP/PFI policy. In addition, the disclosure of this information would prejudice or would be likely to prejudice government commercial interests in any future PPP/PFI model or programme. This is not in the public interest.
Problems with the NAO’s position
It is notable that the NAO did not consider they should withhold the information on the prejudicial or commercial sensitivity grounds that the Department for Education cited in relation to the same information.
In addition, it is hard to see how the information would prejudice formulation or development of policy in this area, given it is arguably in the public interest to understand the assumptions underlying the assertion of a significant differential in pricing. Commercial sensitivity is also difficult to justify, given that it would be easily possible to disclose the information requested in a way that does not identify the origin of the information.
Not only are the exemptions relied upon dubious in this instance, but the timeframe between asking the initial question of the NAO, and receiving a response from the Department for Education, was almost three months. In this period, deadlines by which public authorities are required to respond to Freedom of Information requests were missed.
Overall, this opacity around significant public statements regarding assessing the costs of PFI and non-PFI assets in a comparable way is problematic. If there is to be a meaningful consideration of an important aspect of public spending, greater transparency is needed. This is a complex question, which needs clear and unambiguous data and assumptions in order to clearly be comparing ‘apples with apples’.