Recommendation 19

Authorities have tools to encourage non-cooperative PFI companies to act but they vary from contract to contract. As a minimum, all PFI contracts allow authorities to withhold a portion of their annual payments in the event of poor performance. Local Partnerships told us that authorities will be better positioned if they make these deductions while the debt providers, such as banks, are still involved in the project. It explained that the threat of debt not being repaid would encourage debt providers to put additional pressure on the PFI company to complete any outstanding work. However, the IPA noted that debt was often paid off several years before expiry, meaning authorities need to take early action.47 Withholding annual payments is not always a solution; the NAO identified an example where an authority could only make deductions on the grounds of non- performance or unavailability. This means that if information is not being shared or the assets are not being maintained, but they remain in a usable condition, then the authority cannot withhold any payment.48