PRESS ASSOCIATION -- The Government has announced plans to save £1.5 billion from the cost of private finance initiative (PFI) contracts.
Treasury Economic Secretary Justine Greening said pilot cost-cutting schemes had resulted in savings of around 5% on existing PFI deals and the lessons learned on those schemes would now be applied across the 495 PFI projects in England.
In a written statement, Ms Greening told MPs the money saved would be retained by the contracting authorities and "put towards frontline services".
Conservative MP Jesse Norman has led calls for reform and Ms Greening acknowledged there had been a "strong parliamentary campaign to reduce PFI costs and secure better value for money for the taxpayer".
Draft guidance was issued to public bodies earlier this year on cutting PFI costs and was tested on pilot schemes at the Queen's Hospital in Romford and two Ministry of Defence projects.
Ms Greening said: "Annual savings of around 5% have been confirmed for each of the Romford PFI savings pilot and two MoD pilots. Savings have been identified in three main areas: effective contract management, making better use of PFI assets and ensuring the public sector only pays for what it needs.
"The level of savings achievable at other PFI projects will vary, reflecting the bespoke, complex nature of assets and services delivered under these long-term contracts. But the pilots have shown that valuable efficiency savings can be achieved when private-sector suppliers work together with the public sector to reduce PFI costs."
The Treasury will also work with PFI providers to agree a code of conduct for industry and public sector co-operation on savings.
"The Government will continue to look at what more can be done to get better value for money from existing and future PFI projects," she added.