The National Audit Office has given cautious backing to the private finance initiative in a comprehensive guide to obtaining value for money from PFI deals.
In an introduction to the report, NAO head Sir John Bourn says the PFI approach 'offers the prospect of better value for money than traditional publicly funded methods' although it deals in detail with 'potential pitfalls'.
The report is being presented as an attempt to overcome a widespread belief that the NAO is not in favour of PFI, partly generated by critical reports on projects such as the new hospital for Dartford and Gravesham Hospital trust.
It found the trust miscalculated the savings that would be made in comparison with a publicly funded model by£12m, and criticised other aspects of the deal.
Health secretary Frank Dobson immediately welcomed the report as 'a clear endorsement of properly constructed PFI deals' that 'reinforces our approach to PFI in the NHS'.
But PFI critics said it missed the point. Unison national officer Steven Weeks said: 'It is a useful guide to assessing PFI projects, but it does not deal with the main objections which are principally that the comparison with public sector projects is by its nature biased, and the value of the risks transferred to the private sector are in most cases theoretical.'
Professor Allyson Pollock from University College London's school of public policy, who is advising the health select committee's investigation of PFI in the health service, argues that the 6 per cent discount rate used in the public sector comparator automatically favours PFI.
MPs have also questioned the amount of risk transferred to the private sector in PFI schemes, and whether time and cost over-runs in building publicly funded projects are as high as estimated by some trusts.
The Dartford and Gravesham project assumed cost over-runs of 24 per cent, a figure for which the NAO could find no 'direct' evidence. MPs have argued that cost over-runs on publicly funded projects in the 1990s have been between 6 and 8 per cent.
Assistant auditor general Jeremy Colman told HSJ there was a debate about the Treasury-determined discount rate, which the public accounts committee wants to see reviewed.
But he argued it was harder to determine the correct figure to use for cost over-runs, because of the long timescale involved in most hospital building projects.
'We are against anybody rigging the figures - that is like a bishop arguing against sin,' he said. 'We are also against people stopping when they get the right answer, because the figures are notoriously prone to error.'
The NAO report says managers should 'be prepared to walk away from the procurement if it becomes clear that the project is unlikely to deliver good value'.
But Mr Weeks said: 'Once a public agency is committed, it is very difficult for it to walk away because it has put all its eggs in the PFI project.'
Examining the Value for Money of Deals Under the Private Finance Initiative. The Stationery Office.£12.10.