PFI office rent programme delayed: Public Finance

Posted on November 8, 2008 · Posted in Public Finance

 

The sale and leaseback of 65 government offices that was to have taken place under the Workplace 2010 programme has been suspended, Northern Ireland’s finance minister Nigel Dodds has announced. The PFI project will not now be procured until next year, at the earliest.

 

A statement by the Department of Finance and Personnel claimed that the decision was taken because the two short listed bidders – Land Securities Trillium and Telereal – are reported to be in merger negotiations. If the two companies merge there will cease to be a competitive process in the run-up to the contract award.

 

However, in making the announcement of the suspension in the Assembly, Dodds said that the collapse in property prices was a major factor, which had meant that departments would be unable to realise the projected £175m capital receipts. The project’s suspension “will allow time to assess the impact of recent changes in the financial and property markets on the proposed procurement,” Dodds said. He admitted that this creates a shortfall in the devolved government’s capital spending plans. But Dodds added that he remains committed to the principles of Workplace 2010 as a means of improving civil service office accommodation and improving public service delivery.

 

Mitchel McLaughlin, a Sinn Fein MLA and chair of the Assembly’s finance and personnel committee, told Public Finance that he welcomed the programme’s suspension. “We think its a sound decision, given that we did not agree with [Workplace 2010],” he said, speaking in his Sinn Fein role. “The projected capital receipts are completely unachievable with the decline in property values.”

 

McLaughlin believes his committee will now have doubts about whether the programme should be resurrected. “I suspect the view will be that it needs rigorous assessment,” he said. McLaughlin also believes that the shortfall in receipts will disrupt spending programmes. “My view is that there may be significant pressure on departments to realise savings,” he explained.