Local authorities have improved the way they negotiate finance deals, but key problems remain with support from central government, according to the public accounts committee. MPs challenged the Treasury's finance team last week over private-finance initiatives (PFI) and the use of both market testing and benchmarking as a way of improving contracts. Both the Treasury and the committee accepted local authorities had now built up expertise and had become better at negotiating deals, but MPs raised concerns over the tendering process. They warned that in many cases, the length of time and costs linked to the bidding process meant the public sector was left with the choice of just two bidders. If one bid was poor, an authority was left with little room for negotiation. The Treasury team claimed the public sector was now more experienced and driving a harder bargain with private sector contractors. James Stewart, chief executive of Partnerships UK, which has been set up by the Treasury to spread best practice and provide the public sector with support, said councils had improved the deals they were making. ‘The best authorities are those which have done more than procurement,' he said. ‘Leeds City Council has improved over a number of PFIs. Kent is also good. The issue is about capturing the skills and transferring them from one authority to another.' Jeremy Pocklington, team leader of corporate and private finance at the Treasury, defended his department's approach. ‘We have the most developed market in the world,' he said. ‘The measures we have put in place, such as benchmarking, are showing signs of improvement.' But committee chairman, Edward Leigh, remained unimpressed. ‘We haven't found your performance reassuring. We've seen departments consistently underestimating PFI deals. We think there's been a lot of foot dragging. Local authorities have got better – but at what price? We have placed a financial millstone round our necks,' he said.
