New government guidance on private finance initiative (PFI) projects is unlikely to aid local authorities seeking to push ahead with capital projects, according to local government procurement specialists 4ps.
The new Treasury guidelines issued to government departments indicate that many PFI projects will effectively remain off the government’s balance sheet.
However, it has been widely anticipated that changes to accounting rules to fall in line with International Financial Reporting Standards would see projects brought onto the books.
But for councils, Brian Standen, 4ps’ finance and commercial director, said he expected “things will go on much as before”.
He added: “The guidance provided by the Treasury affects the accounting at the national level but does not appear to affect either the manner in which local authorities or even departments will account for transactions.”
The government announced in the Budget that capital expenditure is to be slashed from £44bn this year to just 22bn in 2013-14.
The news follows the Chartered institute of Public Finance & Accountancy raising concerns about councils being “effectively underwrite” PFI schemes on schools schemes typically worth tens of millions of pounds. It is meeting Whitehall officials to pursue the matter.