Extra PFI advice on the way for councils

District auditors may formally assist councils on the financial and legal implications of taking part in Private Finance Initiatives, after discussions involving the Audit Commission and the PFI panel.

PFIs, which are essentially projects between a local authority and a private sector partner, have been beset by problems, with councils often unsure if they can legally enter schemes.

In one case, council employees were left facing personal liability for a failed venture after a court ruled Waltham Forest LBC had entered a PFI agreement illegally.

Now the Audit Commission and interested parties, such as the PFI panel, are discussing how to help councils ascertain if a proposed PFI is financially and legally sound.

However, with councils facing huge research costs before entering a PFI agreement, one option is for district auditors to help carry the load by sharing their views on suitability.

Rowe and Maw partner and local government specialist Tony Child said that cooperation between local government and the auditor should be welcomed. "Any initiative that encourages local authorities to discuss prospective schemes with auditors is a good thing," he said.

Child added that, while auditors could help councils, they could not assume the role of advisers, and that advice would be needed from others, such as accountants and lawyers.

A discussion paper is not expected until the New Year.