HISTORIC PRESS RELEASE : More Private Finance Initiative (PFI) deals expected as clarity of accounting standards is resolved – Alan Milburn [June 1999]
The press release issued by HM Treasury on 24 June 1999.
Further steps to improve the flow of new PFI hospitals and schools were unveiled by the Government today when Chief Secretary to the Treasury Alan Milburn published new accounting guidance on Private Finance Initiative(PFI).
Mr Milburn said that the revised guidance on PFI accounting transactions will remove ambiguity and build a platform of certainty and clarity upon which PFI can continue to grow.
Already this Government has signed 140 deals worth £4.7 billion since May 1997 including the largest programme of new hospital building in the history of the NHS, he said.
The document reflects extensive consultation between the Treasury and the accounting profession, including the Accounting Standards Board (ASB) and contractors, and offers the clarity of approach that the industry has been waiting for.
Mr Milburn said:
“The Government’s commitment to partnership between the public and private sector has never been greater. The Government’s new guidelines will make PFI work more effectively and more fairly. This will help deliver higher levels of investment to modernise Britain’s key public services such as the NHS.
“By providing a platform of certainty, the new guidance will help the PFI continue to grow.
“Value for money deals go hand in hand with the key test of genuine risk transfer achieved under PFI contracts. This clarity of approach will enable the revised guidance to work in practice.”
The Treasury’s PFI Interim Accounting Guidance was the basis by which rules were first introduced for determining PFI accounting treatment in September 1997. Last year, the ASB published new principles for making such judgements in an Application Note. The ASB has said that the Revised Accounting Guidance is to be kept under review and updated as necessary in the light of developments in PFI to ensure that it remains both “useful in practice and is consistent with the ASB’s Application Note”.
