RESPONSE TO THE COMMITTEE FOR FINANCE AND PERSONNEL'S INQUIRY INTO PRIVATE/PUBLIC PARTNERSHIPS

1. Introduction
Following consideration of the Committee for Finance and Personnel's Terms of Reference for the Inquiry into Public/Private Partnerships, members are aware that this is to be focussed at a higher, strategic level. The Committee's submission is therefore framed around those areas which it suggests could be addressed in your Inquiry. Some members of the Committee noted that there are shortcomings associated with the initiative but that, given the shortage of funds, there may be little alternative to ensure that urgent capital build is carried out.

2. Minimum Economic Size
The Committee for Higher and Further Education, Training and Employment is aware that the private sector estimates that any contract drawn up under PPP needs to be to the value of at least £7 to £8 million to viable. The HFETE Committee questioned whether this then, discriminates against the many smaller businesses in Northern Ireland, in preventing them from bidding, and also whether the initiative is therefore less likely to be effective in Northern Ireland, given the smaller scale of projects here.

It would be beneficial if the Committee for Finance and Personnel could validate the minimum economic size for contracts as part of their Inquiry and whether this is likely to vary between projects and especially between different areas of the public sector.

• Factors to remove/reduce the potential barriers to private sector involvement in small projects should be explored eg
• Is there potential to bundle projects across departments or for small businesses to make joint applications?
• Can the process be streamlined to reduce paperwork etc for smaller firms?
• Can assistance be given to local businesses (within the limits of the European Public Procurement Regulations) to ensure that the Northern Ireland economy benefits from local projects?

3. Specialist Unit
The Committee is aware that individual projects need to be managed from the outset, given criticisms of the time taken for economic appraisals and the tendering process at the set up stage. The PFI Unit within DFP implements and co-ordinates PFI policy in Northern Ireland advises departments and provides links to Treasury Taskforce publications.

• Is there a need for more information specifically focussed on PFI in Northern Ireland?
• Is the composition of the PFI Unit multi-disciplinary?
• Is there a mechanism to facilitate information exchange between departments, especially on best practice?
• Does the Unit evaluate existing projects and disseminate innovations?

4. Key Priorities
Has a cross cutting exercise between Northern Ireland departments been planned to centrally determine key priorities and earmark certain areas which are best suited for Public/Private Partnerships, as opposed to the current seemingly scattergun approach. Has any research been carried out on those projects already in existence in other countries, which have proven most effective?

5. Previous Reports
Have the findings of other initiatives or examinations into PPP/PFI projects been compiled, summarised and communicated in user friendly language to users and potential users?

6. Ownership of Assets
Are there any problems regarding ownership of assets at the end of individual projects? What lessons have been learnt elsewhere that can be of benefit here?

7. Value for Money
What measures are in place to examine the cost effectiveness obtained from individual projects and to ensure that the public sector is not ultimately paying out more in the long term. The Training and Employment Agency may be able to provide some input to this area, having signed a PFI contract for IS/IT in May 1998. The focus of such measures should be on value for money, genuinely combining capital and service requirements. The Committee for Finance & Personnel may also wish to establish a view on the hidden costs involved eg internal staff and consultancy costs, and how this is factored into the overall cost effectiveness.

8. Benchmarks
Have any inter-country comparisons been carried out, and subsequent conclusions drawn, of investment per capita under this initiative. The latest National Development Plan for the Republic of Ireland (November 1999) contains a total PPP investment of IR £1.85 billion, and the total value of the PFI projects listed in the Scottish Executive's Project List now exceeds £2.5 billion. How does Northern Ireland sit alongside these benchmarks?

9. Targeting Social Need
How can PPP/PFI best target disadvantaged areas across a range of initiatives eg education, housing, health. There may also be a risk of an inequality of provision, especially in the Further Education sector, where some Colleges may not be able to afford the capital investment needed at the start of such initiatives, or the projects are not big enough for PPP/PFI.

The Committee for Higher and Further Education, Training and Employment looks forward to the outcome of the Committee for Finance and Personnel's Inquiry.

Mr Mervyn Carrick, MLA
Deputy Chairman
Committee for Higher and Further Education, Training and Employment
24 May 2001

Minutes of 17 May: section 5 Matters arising , para 1

Minutes of 24 May: section 4 Matters arising, para 1