HC Deb 20 July 2000 vol 354 c292W
Mr. Matthew Taylor

To ask the Secretary of State for Education and Employment what the net present cost is of each project undertaken in his Department under the private finance initiative; what the value is of their public sector comparators in(a) pre-risk and (b) risk-adjusted terms; what risks have been identified as having been transferred; and if he will place information on other relevant costs for each private finance initiative project in the Library. [130251]

Mr. Wicks

[holding answer 13 July 2000]: Net present costs of the Department's PFI projects are as follows:

The ESCOM contractor's major risk relates to the demand for the service. Both the IT Partnership and the HR Partnership contracts have transferred the risks relating to service availability and performance, which are seen as critical in the delivery of services under the contract.

The bids made during the competition to select the successful private finance initiative contractor, in particular any financial information, are commercially confidential as is any subsequent documentation directly referring to the bids. I am therefore unfortunately unable to place information on costs in the Library.

Mr. Matthew Taylor

To ask the Secretary of State for Education and Employment what estimate he has made of the cost of the Birmingham LEA grouped school refurbishment PFI project at each stage of its development; if he will list the causes of significant change in costs; and if he will make a statement. [131586]

Jacqui Smith

Birmingham local education authority's outline business case for the school rebuilds package PFI scheme was approved by the Treasury-chaired Project Review Group in December 1998 at an estimated cost in net present value (NPV) terms of £61.2 million. A contract was signed in February 2000 on the basis of a final business case which estimated the cost of the scheme, in NPV terms, at £78 million. The main causes of the increase were:

  1. (a) improvements to the output specification—for example, to accommodate children with special needs in mainstream schools and to improve sports facilities;
  2. (b) technical changes to the calculation of the cost of the scheme—for example, the fall in the local authority rate of discount from 8.9 per cent. to 8.4 per cent.;
  3. (c) an underestimate in the outline business case of the cost of operation of the new and refurbished schools over the 30 year life of the contract.

The local authority has confirmed that this PH scheme provides better value for money than would have been achieved through conventional procurement.