Report to the Northern Ireland Assembly by the Comptroller and Auditor General
Reporting of the Executive’s long-term borrowings and commitments arising from Private Finance Initiative contracts, needs to be more transparent to the Assembly. That is the key finding from a report published by Kieran Donnelly, Comptroller and Auditor General.
Mr Donnelly said:
“Borrowing through the Reinvestment and Reform Initiative2 and use of the Private Finance Initiative3 has helped deliver improvements to public services and infrastructure. However, both give rise to long-term commitments. It is important that the wider Assembly, including statutory committees, are made aware of their impact on departmental budgets and that they remain within affordable and sustainable limits.”
According to today’s report, the Executive has, up to March 2013, accessed £2 billion of borrowing through the Reinvestment and Reform Initiative. Annual repayments have doubled in the past five years to £100 million in 2013 and are expected to peak at £140 million a year from 2016 to 2021. While borrowing is intended for financing Northern Ireland’s substantial infrastructure investment programme, recent expenditure funded from Reinvestment and Reform Initiative borrowings highlights the need for more clarity and transparency.
The Report records that the current 39 operational PFI contracts have built up an estimated £7 billion of commitments against future years' departmental resource budgets, costing an average of £245 million each year until 2030. However, there is currently no central collection of PFI costs and commitments or dissemination directly to the Assembly or its Committees.
The Report also highlights the need to test the cost and quality of services to ensure that value for money has been achieved during the life of a PFI contract. While other UK regions have instigated programmes to assess the scope for such savings, there is no similar strategic programme in Northern Ireland. However, the Report commends some public bodies in Northern Ireland who have identified efficiency savings but concludes that there is significant scope for driving further efficiencies. Mr Donnelly said:
“A coordinated efficiency review programme of operational PFI contracts will maximise the opportunities to realise value for money savings. This needs to be started with regular reporting of outcomes and savings to the Assembly.”
Background briefing can be obtained from the Audit Office by contacting Brandon McMaster (028 9025 1077) or Sean Beattie (028 9025 1091).