Mike Hedges AM Raises PFI in Wales with First Minister

Speaking after the First Minister Question Time, Mike Hedges AM said…. ‘I welcome the First Minister’s reply to my question. PFI Contracts are hugely wasteful of public money and I am pleased that the PFI contracts in Wales will be reviewed and that the Welsh Government might consider supporting ways to use the invest to save scheme to reduce their service payments. Some of these schemes are incredibly expensive and the money could be better spent elsewhere.’

Mike Hedges AM – 5. Will the First Minister make a statement on PFI contracts with public bodies in Wales that are funded by the Welsh Government? OAQ53277

First Minister of Wales
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Llywydd, there are 23 historic private finance initiative contracts with Welsh public bodies currently operational in Wales. The annual service payment for these schemes totals around £105 million. These schemes must be the subject of regular review, and arrangements for that review will be set out shortly.69

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Mike Hedges AM – This is an issue I’ve raised regularly with the First Minister when he was Cabinet Secretary for Finance. I believe PFI schemes are expensive and a waste of public money, and are taking money out of revenue. Will the First Minister undertake a cost-benefit analysis for all of the schemes currently paid for by Assembly-funded public bodies in Wales, and then consider using invest-to-save to buy out those where it would be beneficial to do so, which I believe would probably be most of them?70

First Minister of Wales
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I thank Mike Hedges for that question and for the regular advice that he has provided on this matter—advice that, as he knows, is consistent with the approach that successive Welsh Governments have taken since devolution. In Wales, citizens pay about £40 per head each year as a result of PFI schemes, and that’s about a fifth of what citizens in other parts of the United Kingdom have to pay.71
I agree with what Mike Hedges has said, Llywydd—that there should be a review of historic PFI schemes. The Welsh Government will shortly be writing out to all contracting authorities in Wales to make sure that that happens, and that it happens every year. In the first instance, it is for those contracting authorities to review the contracts and to see where there may be potential scope to make savings on their annual service payments. In order to incentivise that practice, the policy we will pursue will be that that authority will be able to retain any savings that it generates in that way.72
In cases where an authority is considering early termination of the contract, then there will need to be a dialogue between that authority and the Welsh Government. We may be able to look at measures such as our invest-to-save fund to assist them in doing just that.