Finance watchdog in checks on pounds 12bn projects

A government initiative to spend pounds 12bn over the next two years in partnership with the private sector, is to come under scrutiny, it was announced yesterday.

The National Audit Office, the public finance watchdog, said it is to conduct a series of investigations into the Government's Private Finance Initiative, which formed a central plank of the recent Budget.

Kenneth Clarke, the Chancellor of the Exchequer, said pounds 5bn of PFI projects, mainly covering health and transport, would be launched this financial year, followed by a further pounds 7bn in 1996-97.

Jeremy Colman, a senior director at the National Audit Office, said yesterday: "Many of these projects are of such a size and importance that they would traditionally attract NAO's attention."

Mr Colman added that the NAO's staff had already started monitoring the initiative.

Over the next 12 months they will be examining how Whitehall departments have handled each project and the steps they have taken to ensure value for money for the taxpayer.

Mr Colman stressed that it was not for the NAO to question the merits of government policy. However, the PFI reports will be laid before Parliament and will be taken up by the influential Commons Public Accounts Committee.

One of the committee's usual concerns, that government contracts must be put out to competitive tender, will be tested by the PFI.

The initiative is designed to encourage the private sector to come up with innovative schemes for financing building projects, including hospitals.