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DOE POWER STRUGGLE DELAYS PRIVATE FINANCE INITIATIVE

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The progress of the prime minister's much-vaunted private finance initiative is being delayed by an internal disput...
The progress of the prime minister's much-vaunted private finance initiative is being delayed by an internal dispute in the DoE over who should take control of the project.

Councils are expressing concern and frustration at the department's approach. They fear being saddled with the blame if the initiative fails to achieve tangible results.

Their frustration is mounting because ministers are increasingly emphasising the importance of private finance as a way of plugging the gap left by public sector spending cuts.

Councils have been seeking discussions with DoE officials since November, following a personal invitation from prime minister John Major to draw up a private finance initiative 'shopping list' (LGC, 11 November 1994).

Local government minister David Curry wrote to the local authority associations on 17 November offering exploratory talks with civil servants at assistant secretary level.

The associations replied a week later saying the discussions should be held at a higher deputy secretary level given the importance attached to the initiative.

'We wanted to discuss the real possibilities rather than get bogged down in the detail,' said one senior association officer.

The delay is understood to have been caused by an internal tussle between two under-secretaries - Mavis McDonald, head of local government directorate, and Paul Britton, head of the local government finance policy - over who should have overall control. Ms McDonald is believed to have won.

'Councils are anxious to explore every angle of the private finance initiative to overcome the shortage in capital finance,' said a senior association officer. 'There are no ideological hang-ups about it.'

Another officer said the DoE was 'just not geared-up' for the initiative. 'The original idea was launched in the autumn of 1992. It is now January 1995 and we are watching officials scrap over responsibilities.'

Councils are also finding it difficult to develop schemes which fall within the government's remit.

'Individual authorities are coming up with ideas but it is difficult to transmit these into general regulations without having a significant impact on public sector finances,' said a senior officer.

The comments came as the DoE announced details of the relaxation of capital regulations for councils which enter joint ventures with the private sector. This follows a consultation paper, issued before Christmas, on new rules governing local authority companies.

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