5. Will the First Minister make a statement on PFI contracts with public bodies in Wales that are funded by the Welsh Government? OAQ53277

Llywydd, there are 23 historic private finance initiative contracts with Welsh public bodies currently operational in Wales. The annual service payment for these schemes totals around £105 million. These schemes must be the subject of regular review, and arrangements for that review will be set out shortly.

This is an issue I've raised regularly with the First Minister when he was Cabinet Secretary for Finance. I believe PFI schemes are expensive and a waste of public money, and are taking money out of revenue. Will the First Minister undertake a cost-benefit analysis for all of the schemes currently paid for by Assembly-funded public bodies in Wales, and then consider using invest-to-save to buy out those where it would be beneficial to do so, which I believe would probably be most of them?

I thank Mike Hedges for that question and for the regular advice that he has provided on this matter—advice that, as he knows, is consistent with the approach that successive Welsh Governments have taken since devolution. In Wales, citizens pay about £40 per head each year as a result of PFI schemes, and that's about a fifth of what citizens in other parts of the United Kingdom have to pay.

I agree with what Mike Hedges has said, Llywydd—that there should be a review of historic PFI schemes. The Welsh Government will shortly be writing out to all contracting authorities in Wales to make sure that that happens, and that it happens every year. In the first instance, it is for those contracting authorities to review the contracts and to see where there may be potential scope to make savings on their annual service payments. In order to incentivise that practice, the policy we will pursue will be that that authority will be able to retain any savings that it generates in that way.

In cases where an authority is considering early termination of the contract, then there will need to be a dialogue between that authority and the Welsh Government. We may be able to look at measures such as our invest-to-save fund to assist them in doing just that.

First Minister, I'm more than happy to support Mike Hedges in his call for that review of spending on PFI projects within Wales. We do know that some of the early PFIs particularly were very costly, and you've quoted the £100 million a year—£105 million a year—cost figure that the Wales Governance Centre have also provided.

Whilst I appreciate that your Government is certainly sceptical of PFI, you are supportive of the mutual investment model. Can you tell us what lessons have been learnt from some of those problems with the early PFI projects to make sure that the way that the Welsh Government works with the private sector to deliver initiatives using the MIM model doesn't encounter, over the longer term, some of the problems that PFI faced in the past?

I thank the Member for that question and for the interest that he has taken in the mutual investment model, which is indeed designed to make sure that we learn the lessons from the past. It incorporates the best of the Scottish non-distributing model, and I noted with interest, Llywydd, that the First Minister of Scotland referred to developing their ideas on the basis of our model as they look to invest further in infrastructure projects in Scotland.

So, the mutual investment model will not, for example, be used to finance soft services, such as cleaning and catering, and they were often at the heart of the inexpensive and inflexible contracts in the historic PFI model, nor will MIM be used to finance capital equipment. A public interest director will be appointed by the Welsh Government to manage a public shareholding, which we intend to take in each MIM scheme, ensuring that the public sector participates in any return on the investment that we are making. As well as being of interest to the First Minister of Scotland, Llywydd, the United Nations, which has recently produced a compendium of innovative finance schemes—people-first schemes, it's called—highlights the MIM as a model of a way of doing things that promotes well-being, value for money and transparency in the way that the scheme has been structured.