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31 March 2016
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ESA Trouble

Could ESA10 really save PF2 – or even bring back PFI?

Back in 2006, David Cameron made his first conference speech as the fresh-faced new leader of the Conservative Party, where he famously told his party it needed to stop “banging on” about Europe.

A decade later, and it seems everyone is now banging on about Europe – thanks in no small part to Cameron’s own decision to hold a referendum on the UK’s continuing membership of the bloc.

But it is not just UK politicians. Today, the whole of Europe’s infrastructure community is certainly spending plenty of time thinking about Europe, and in particular, one agency within the Brussels bureaucracy: Eurostat.

The European Commission’s statistics directorate has rarely enjoyed such a high profile, as the infrastructure industry grapples with its increasingly inflexible rules around what counts as on and off the public sector balance sheet. This week, it was revealed that Scotland has been forced to drop the use of its non-profit distributing (NPD) model for two schemes and instead capitally fund them. Much-needed infrastructure could not wait any longer for a solution to be found for the NPD approach – which now sees deals accounted for on the Scottish government’s books – and so the money simply had to be found up-front.

Such an approach has been taken elsewhere in Europe, too. The Liege tram project in Belgium, for example, is now being retendered because to as to structure it in a way that will see it remain off balance sheet.

As our April issue’s cover feature explains in more detail, there are many complexities to this debate and it is likely to rage on for some time.

But perhaps the most intriguing aspect of the rulings around the ESA10 accounting standards is that they could mean the new way of doing things is in fact the old way of doing things.

The main problems with current models, in Eurostat’s view, seems to be around the amount of control wielded by the public sector, particularly when it comes to models such as NPD which are specifically designed to give the public procurer a greater stake – and say – in a scheme’s direction.

It is understood that Westminster’s PF2 model would not fall foul of ESA10, meaning it could provide a model for other European countries to structure their deals.

And as one source has already pointed out, Transport for London’s tender for the Silvertown Tunnel PPP looks much more like an old fashioned PFI deal than anything else.

The times may be changing, but in doing so it may well be that solutions from the past will come to the rescue.

 

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