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1
March 2016
PPP disclosure
A view from the UK audit office
2
Contents
• Disclosure during the project life
• Changes under PF2
• Themes from NAO work
• Appendix
• NAO recommendation...
3
Disclosure (procurement, construction)
Procurement phase Construction phase
National
Infrastructure
Plan and
Pipeline
Te...
4
Disclosure (operational stage)
National
Accounts
Financial accounts HMTreasury
databaseGovernment SPV
Project company
ac...
5
Changes under PF2
• Business case approval tracker
• Private sector to provide forecast and
actual equity returns data
•...
6
Themes from previous NAO work
• The more data the better! (but there are costs)
• Commercial sensitivity vs public inter...
7
Appendix
8
NAO recommendations regarding data
The Choice of Finance for capital investment (2015) https://www.nao.org.uk/report/the...
9
HMT PFI database as a data source
10
Financial accounts as a data source
• Data from Departmental accounts, Whole of Government Accounts
and SPV accounts wa...
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PPP disclosure - A view from the UK audit office - Daniel Fairhead, United Kingdom

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Presentation made by Daniel Fairhead, National Audit Office, United Kingdom, at the 9th annual network meeting of Senior Infrastructure & PPP Officials held at the OECD, Paris, on 1 March 2016

Published in: Government & Nonprofit
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PPP disclosure - A view from the UK audit office - Daniel Fairhead, United Kingdom

  1. 1. 1 March 2016 PPP disclosure A view from the UK audit office
  2. 2. 2 Contents • Disclosure during the project life • Changes under PF2 • Themes from NAO work • Appendix • NAO recommendations regarding data • Examples of NAO analysis using different data sources
  3. 3. 3 Disclosure (procurement, construction) Procurement phase Construction phase National Infrastructure Plan and Pipeline Tender documents PFI/PF2 procurement database and project trackers Departmental transparency data Project specific websites (some large projects)  Initial information - encourage interest from potential bidders for work  PFI/PF2 project trackers produced by HM Treasury  Some large projects provide information during the construction phase Trade journals/websites
  4. 4. 4 Disclosure (operational stage) National Accounts Financial accounts HMTreasury databaseGovernment SPV Project company accounts Aggregated data Project specific Reconciliation required  Information on PFI liabilities (ESA10 vs IFRS)  Departmental accounts - finance, operational cost split. Performance data in some cases  Whole of Government Accounts aggregate all Departmental accounts PFI database  SPV accounts  Useful information on financing structure and costs  Inconsistent reporting  Data on future commitments, capital value and key dates  Other PPPs not included European System of Accounts Departmental & WGA (IFRS)
  5. 5. 5 Changes under PF2 • Business case approval tracker • Private sector to provide forecast and actual equity returns data • Access to performance information through membership of board • Annual report with project and financial data on all PF2 projects • Improved information provisions within standard contract • Open book approach – facilitate sharing of any surplus lifecycle funding • Control total for all PFI/PF2 projects – Office for Budget Responsibility to report on.
  6. 6. 6 Themes from previous NAO work • The more data the better! (but there are costs) • Commercial sensitivity vs public interest • Accurate and standardised data allows comparisons between projects and procurement methods. • Increased access to agreed financial terms (debt and equity) of private finance deals to improve value for money. • Central collation of data • Transparency and comparability of capital spending data (both PPPs and traditional procurement) • Investor returns following equity sales
  7. 7. 7 Appendix
  8. 8. 8 NAO recommendations regarding data The Choice of Finance for capital investment (2015) https://www.nao.org.uk/report/the-choice-of-finance-for-capital-investment/ • Improve the transparency of capital spending data. Trends in historical and forecast capital investment, and in the mix of financing and funding models, would be more readily observable if government reviewed the various public data sources and increased their consistency and completeness, which may support long-term planning. • Improve decision-makers’ access to the terms of private finance deals. Central collection and distribution of financial close data, including all PFI and consumer-funded PPP projects, could improve the government’s understanding of the relationship between project risks and cost of capital, reveal more opportunities for savings and could be incorporated into refreshed value-for-money assessment guidance. • Facilitate direct comparisons between the performance of similar projects with different financing choices. Detailed comparisons between the benefits and costs of alternative procurement decisions, such as individual cost items, asset quality and performance, and maintenance standards, could improve decision-making and increase confidence in the value-for-money assessment and benefits of long-term contracts with private sector partners. Equity investment in privately financed projects (2012) https://www.nao.org.uk/report/equity-investment-in-privately-financed-projects/ • The Treasury should…. be transparent about investors actual risks and rewards, to enable proper assessment of the value for money being achieved from using investors. • The Treasury should establish with investors a standard form of disclosure so that, on each change of shareholder, authorities become entitled to equity sales data sufficient to judge the rate of return to the seller. Authorities should regularly use their contractual rights to obtain up-to-date financial information from project companies. Lessons from PFI and other projects (2011) https://www.nao.org.uk/report/lessons-from-pfi-and-other-projects/ • Greater focus should be given to the types of data that should be gathered to improve decision-making, who should collect them and the cost of collection.
  9. 9. 9 HMT PFI database as a data source
  10. 10. 10 Financial accounts as a data source • Data from Departmental accounts, Whole of Government Accounts and SPV accounts was used in our Choice of Finance report

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