PFM Board
Medium Term Expenditure Framework => Public Investment Management => Topic started by: John Short on December 04, 2012, 07:40:50 GMT
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Big changes to PFI in UK trailed this morning maybe announcement in Autumn Statement.
Up to 49% taken in implementing company by Treasury to get share of profits (presumably will put in cash up front!)
Nominated Director by Treasury to Board to keep an eye on things.
Exclusion of IT, Catering and other soft running costs
Additionally some restructuring of existing deals to make savings.
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Does the 49% figure keep it off the books?
I guess the public sector will also take it's share of any losses well.
What are the incentives for the public sector board members? To minimise costs to the public or to maximise the profits of the PPFI entity? It seems like there is a built-in contradiction here.
I'm not entirely convinced by the logic of this move.
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Listening to Robert Peston describing this, no mention was made of cash injection by Treasury so it just seems like an extra tax on PFI arrangements to cream off "excess profits"! (Also no mention in internet write ups.) As for losses.......? No doubt all will be revealed and this will be a model for the rest of the world to follow. It now appears to be PF2.
http://uk.finance.yahoo.com/news/autumn-statement-private-finance-scheme-081846442.html
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Getting a 49% share without stumping up any cash seems like a good trick. If I were a private sector operator I would certainly be considering increasing my margins to cover the additional 'tax'. Self-defeating?