On the 14th June 2013, HM Treasury published its Code of Conduct for Operational PFI / PPP contracts with the intent of driving better behaviours, particularly amongst PFI providers, in support of its aim of making savings.
It is fair to say that the Code of Conduct’s reception has been lukewarm. It has been variously described as “a modest attempt to influence behaviour” and as “toothless”. It’s basic commitments include each party:
In addition, the private sector must not unreasonably refuse consent to variations suggested by the public sector and must provide clear and transparent information regarding a project’s consumables, energy and utility usage and costs. In return, the public sector must give reasonable and prompt consideration to any efficiency opportunities identified by the private sector.
Despite the mixed views, almost one year on from the Code of Conduct’s release, we examine the uptake.
To date, there have been 159 signatories to the Code. They are made up as follows:
It is fair to say that the Code of Conduct’s reception has been lukewarm. It has been variously described as “a modest attempt to influence behaviour” and as “toothless”. It’s basic commitments include each party:
- agreeing a single point of contact for each project;
- engaging in a constructive and timely manner;
- meeting on a regular basis to discuss savings and operational efficiencies; and
- working together to identify operational improvements and develop joint strategies.
In addition, the private sector must not unreasonably refuse consent to variations suggested by the public sector and must provide clear and transparent information regarding a project’s consumables, energy and utility usage and costs. In return, the public sector must give reasonable and prompt consideration to any efficiency opportunities identified by the private sector.
Despite the mixed views, almost one year on from the Code of Conduct’s release, we examine the uptake.
To date, there have been 159 signatories to the Code. They are made up as follows:
Unsurprisingly, the largest percentage of signatories are the public sector themselves. It would, after all, be difficult to lecture the private sector if you haven’t signed up yourself.
Turning to the main private sector investors / sponsors, there are currently 40 signatories. The HMT Current Projects List (last updated in March 2012) lists over 130 different investors in the UK’s PFI projects; meaning that almost 70% of the investors have yet to sign up. Is it not time for a complete name and shame list? A few well known names, who are notable by their absence, are:
3i Group Plc
Babcock International Group Plc
BAE Systems Plc
Biffa
BT Plc
Dalmore Capital Limited
E.ON
FCC Construction
G4S Plc (other than in respect of one project)
Lend Lease Investment Management
Lend Lease PFI/PPP Infrastructure Fund
Macquarie
Morgan Sindall Group Plc
Veolia
The next group of signatories are the funding institutions and monolines who provide the majority of the debt or bond finance and, importantly, can often either block savings measures from being implemented completely, or seek to charge disproportionate fee levels for agreeing to them.
The HMT Current Projects List does not list funders on projects (perhaps it should) but notable absentees include:
Ambac
Assured Guaranty Municipal
AXA Group
Bayern LB
Commerzebank
European Investment Bank
Financial Guaranty Insurance Company (FGIC)
Heleba Landesbank
Municipal Bond Insurance Association (MBIA)
Prudential
Finally, there are currently 717 operational PFI contracts covered by the Code of Conduct, each one with a separate project company. Yet only 28 of these have signed up, a miserly 4%. Well done to those who have.
From the above figures, it is clear that there is a long way to go to have a private sector that is committed to the Code of Conduct. And yet many of the companies and institutions who have not signed up continue to benefit from new contracts with UK plc. Is this the right message to send?
Turning to the main private sector investors / sponsors, there are currently 40 signatories. The HMT Current Projects List (last updated in March 2012) lists over 130 different investors in the UK’s PFI projects; meaning that almost 70% of the investors have yet to sign up. Is it not time for a complete name and shame list? A few well known names, who are notable by their absence, are:
3i Group Plc
Babcock International Group Plc
BAE Systems Plc
Biffa
BT Plc
Dalmore Capital Limited
E.ON
FCC Construction
G4S Plc (other than in respect of one project)
Lend Lease Investment Management
Lend Lease PFI/PPP Infrastructure Fund
Macquarie
Morgan Sindall Group Plc
Veolia
The next group of signatories are the funding institutions and monolines who provide the majority of the debt or bond finance and, importantly, can often either block savings measures from being implemented completely, or seek to charge disproportionate fee levels for agreeing to them.
The HMT Current Projects List does not list funders on projects (perhaps it should) but notable absentees include:
Ambac
Assured Guaranty Municipal
AXA Group
Bayern LB
Commerzebank
European Investment Bank
Financial Guaranty Insurance Company (FGIC)
Heleba Landesbank
Municipal Bond Insurance Association (MBIA)
Prudential
Finally, there are currently 717 operational PFI contracts covered by the Code of Conduct, each one with a separate project company. Yet only 28 of these have signed up, a miserly 4%. Well done to those who have.
From the above figures, it is clear that there is a long way to go to have a private sector that is committed to the Code of Conduct. And yet many of the companies and institutions who have not signed up continue to benefit from new contracts with UK plc. Is this the right message to send?
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