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HM Treasury
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Government plans to reform PFI model
The Government
will review the private finance initiative (PFI) and consider
other delivery models, the Chancellor announced today. The
objective of the review, led by the Treasury, is to create a new
model for delivering public assets and services that takes
advantage of private sector expertise, but at a lower cost to the taxpayer.
The Government’s approach to reform the PFI model will look to create a model which is cheaper, accesses a wider range of private sector financing sources and strikes a better balance of risk between the private and the public sectors. The review will create a model which:
• 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 over the longer term.
The Treasury will be launching a call for evidence on 1 December 2011 that will make full use of the wealth of experience across the public and private sectors and learn the lessons of the past twenty years of PFI. The Treasury will also be looking to retain the benefits of the PFI model, including getting projects delivered to time and to budget, and giving the private sector the right incentives to effectively manage risk.
The Chancellor, George Osborne, said:
“We have consistently voiced concerns about the misuse of PFI in
the past and we have already taken steps to reduce costs and
improve transparency.
”But the review I have announced today
will take this a step further with a fundamental reassessment of
PFI. We want a new delivery model which draws on private sector
innovation, but at a lower cost to the taxpayer and with better
value for public services.”
Notes for Editors
1. The Written Ministerial Statement announcing this reform can
be found here: http://www.hm-treasury.gov.uk/iuk_pfi_reform_call_for_evidence.htm.
2.
This Government has consistently expressed concerns about the
misuse of PFI and has already announced a number of significant
steps in order to improve the cost effectiveness and transparency
of PFI, including:
• abolishing PFI credits at the Spending
Review 2010 to create a level playing field for all forms of
public procurement;
• introducing new assurance and approval
arrangements in April 2011 to strengthen the approval process of
all projects;
• in July 2011, including PFI liabilities in
the unaudited Whole of Government Accounts to improve
transparency; and
• announcing a plan to deliver £1.5 billion
of savings from the existing stock of PFI contracts in England.
Non-media enquiries should be addressed to the Treasury
Correspondence and Enquiry Unit on 020 7270 4558 or by e-mail to
public.enquiries@hmtreasury.gsi.gov.uk
This Press Release and other Treasury publications are
available on the HM Treasury website hm-treasury.gov.uk For the
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Media enquiries should be addressed to
the Treasury Press Office on 020 7270 5238.
Contacts:
HM Treasury Press Office (Media)
Phone: 020 7270 5238
NDS.HMT@coi.gsi.gov.uk
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