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15/07/03

Technology Industry Response to Treasury PFI Announcement

Intellect welcomes today's announcement as another step in the development of a maturing, intelligent relationship between customers and suppliers in the public sector. It has been clear for some time that PFI presented a genuine challenge for customers and suppliers in the public sector in trying to reconcile long-term contractual arrangements with rapidly changing technology and requirements. Indeed, for larger IT-enabled business change projects in the public sector, such approaches could not have been considered appropriate and in certain instances contributed to poorly-implemented projects.

IT remains fundamental to the public sector reform agenda and it is crucial that correct funding systems are in place, which support this work.

Intellect understands, and is pleased to hear, that projects under negotiation are not affected by the announcement. It will be for departments to consider how advanced particular negotiations are and decide, in consultation with their suppliers, whether or not to continue with any plans for a PFI approach. This is entirely appropriate given the importance of such projects to the achievement of public service reform.

However Intellect will work closely with the Treasury to ensure that confidence is retained in IT-enabled business change projects through the following approach:

• Mechanisms which safeguard those projects currently being implemented under PFI;
• An effective dialogue between customer and supplier for projects in their earliest stages to establish whether PFI should continue to be pursued; and
• Reassurance that the pace of IT change in the public sector will not relent, now that one route to funding for the public sector has been removed.

Intellect's Director General John Higgins commented, "We're delighted that Government has responded to the industry's concerns about PFI for IT projects. IT projects don't exist in isolation. They are a usually a significant part of a process of complex business change for which PFI was rarely a suitable tool. Removing complexity from financing structures is another positive step to ensuring a more competitive market and ultimately that tax-payers get a better return on public sector investment in IT."

Through our work with the Office of Government Commerce on the Senior IT Forum, Intellect will seek to ensure that today's announcement benefits not only customers and suppliers, but ultimately the citizen, the real beneficiaries of public sector IT projects.

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