Reform of the Private Finance Initiative
Reform of the Private Finance Initiative
On 15 November 2011, the Government released the below details of the proposed reform of the PFI model. The call for evidence will be launched on 1 December 2011.
“Today the Government has announced its intention to reform the Private Finance Initiative (PFI).
The Government is committed to continuing sustainable investment in the assets we need to deliver public services, including our schools, hospitals and roads. However, we need to ensure that this investment is cost effective, and that the taxpayer is getting maximum value for money.
The Government expects a new delivery model to draw on private sector innovation but at a lower cost to the taxpayer, offering better value for our investment in public services. The Treasury will lead a broad based engagement process with interested parties to bring forward proposals for a new approach in using the private sector in the delivery of public assets. The call for evidence will be launched on 1 December 2011 and the Government welcomes all constructive engagement from stakeholders. Further detail on how to participate in the process will be available at this point.
The Government’s approach to reform will be guided by the following principles, to create a model that:
-
is less expensive and that uses private sector innovation to deliver services more cost effectively;
-
can access a wider range of financing sources, including encouraging a stronger role to be played by pension fund investment;
-
strikes a better balance between risk and reward to the private sector;
-
has greater flexibility to accommodate changing public service needs over time;
-
maintains the incentive on the private sector to deliver capital projects to time and to budget, and to take performance risk on the delivery of services;
-
delivers an accelerated and cheaper procurement process; and
-
gives greater financial transparency at all levels of the project so that the public sector is confident that it is getting what it paid for, and that the taxpayer is sure it is getting a fair deal now and in the longer term.
The Written Ministerial Statement of today’s announcement can be found at http://www.hm-treasury.gov.uk/d/iuk_pfi_wms_151111.pdfand the Press Notice at http://www.hm-treasury.gov.uk/press_128_11.htm. The PFI Reform: Call for evidence page on the Treasury website can be accessed athttp://www.hm-treasury.gov.uk/iuk_pfi_reform_call_for_evidence.htm.”
