The Government is committed to continuing sustainable investment in the assets we need to deliver public services, including our schools, hospitals, roads, waste facilities, prisons, housing, defence facilities, libraries, fire stations and more. However, we need to ensure that this investment is cost effective and that the taxpayer is getting maximum value for money. The Private Finance Initiative (PFI) has been used to deliver around 700 new facilities across a range of sectors in the UK since its inception in 1992 but the Government shares some of the commonly identified concerns that PFI contracts can be too costly, inflexible and opaque.
Fundamentally reforming the PFI model will be the next in a series of steps that this Government has already taken to improve the cost effectiveness and transparency of PFI. We abolished PFI credits at the Spending Review 2010 to create a level playing field for all forms of public procurement. We also introduced new assurance and approval arrangements in April this year, to strengthen the scrutiny given in the approval process of all projects, including those using private finance. In July, to improve transparency, the Government published, for the first time, the unaudited Whole of Government Accounts which included an assessment of the PFI liabilities and we announced a plan to deliver £1.5billion of savings from the existing stock of PFI contracts in England.
The Government believes private sector innovation and skills can and should play a strong role in improving the delivery of public sector assets and services. At the same time, as financing markets change and develop in response to changing financial regulation and a changing global economy, we must ensure that if private finance is used to deliver public sector assets and services, we access wider financing sources; and that the costs of private finance are more than offset by the wider benefits of private sector delivery.
This Government now intends to undertake a fundamental reassessment of PFI and wants to develop a new delivery model that draws on private sector innovation but at a lower cost to the taxpayer and offering better value for our investment in public services.