Call for scrutiny of PFI equity sales says PAC
The market for sales of equity in Private Finance Initiative (PFI) deals should be closely watched by the Treasury, parliament's public spending watchdog said, as it raised fears that they might not be in the public interest.
When privately financed projects such as schools, hospitals and roads are refinanced, the public sector should now receive a share of the gains.
But "there is no requirement for the gains made by investors through selling on their shares in PFI projects to be shared with the government", Edward Leigh, the chairman of the House of Commons Public Accounts Committee, said.
The precise scale of the equity sale market is not known because the Treasury does not collect figures. But the number of such sales has been rising. All or part of the equity has been sold in 32 of the 80 projects surveyed by the National Audit Office, either to new investors or to one of the initial investors. Carillion, for example, has sold equity investments it acquired for £24m for £46m.
The Treasury takes the view that while debt refinancings affect the public sector's rights, a change in the equity ownership does not affect the public sector. Profits are taxed through capital gains, and the Treasury believes that, in essence, the transactions are no different to other private- sector deals.
But in the report the committee said the Treasury view "is only credible
When privately financed projects such as schools, hospitals and roads are refinanced, the public sector should now receive a share of the gains.
But "there is no requirement for the gains made by investors through selling on their shares in PFI projects to be shared with the government", Edward Leigh, the chairman of the House of Commons Public Accounts Committee, said.
The precise scale of the equity sale market is not known because the Treasury does not collect figures. But the number of such sales has been rising. All or part of the equity has been sold in 32 of the 80 projects surveyed by the National Audit Office, either to new investors or to one of the initial investors. Carillion, for example, has sold equity investments it acquired for £24m for £46m.
The Treasury takes the view that while debt refinancings affect the public sector's rights, a change in the equity ownership does not affect the public sector. Profits are taxed through capital gains, and the Treasury believes that, in essence, the transactions are no different to other private- sector deals.
But in the report the committee said the Treasury view "is only credible