A report published today by John Dowdall CB, the Comptroller and Auditor General for Northern Ireland, highlights concerns over the transfer of surplus land to the private sector in four of the five Education PFI Pathfinder contracts.

Although £23 million was generated from the transfers and a further £3.8 million secured through clawback clauses built into the contracts, Mr Dowdall concludes that the public sector could have done more to secure value for money.

The Report identifies some important lessons for public bodies. These include the need to assess the relative returns and priority between inclusion of surplus assets in any PFI deal and conventional disposal and the importance of properly assessing the contribution these assets may make to the achievement of other strategic priorities and objectives.

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The report considers that the development and implementation of an effective estates strategy for Northern Ireland is crucial to maximizing the benefits to be derived from the public sector estate.

NIAO estimates this shortfall to be in the region of £4 million at contract signature. According to NIAO, a contributory factor was the absence of up to date land valuations prior to contract signature. For example, NIAO’s examination of the transfer of lands on the Rosetta site (part of the Wellington site) found that the valuation was completed 10 months before the site was transferred and was based on incorrect information as to its size. The report sets out the factors which were considered by the public authorities at the time of the deal.

The NIAO report also highlights the importance to public bodies of having controls in place to protect their future interests in the event of the onward sale of transferred surplus land or its development by the private sector. In the Pathfinder Projects, while clawback arrangements were put in place, NIAO considers that they were not fully effective. The report records that the Wellington/Balmoral contract is the only one where clawback has been secured to date. Although £3.8m was secured by the Belfast Board, NIAO estimates that this, plus the £19.8m received by the Board for the land at contract signature, is only £400k in excess of NIAO’s estimate of the value of the lands at contract signature six years earlier. NIAO considers that, on the basis of estimates at the time of the Agreement in 2000, greater benefits from clawback could potentially have been realised.

(JM)