16 Equity investors have helped to deliver many infrastructure projects and to manage them in ways from which the public sector can learn. The range of evidence that we have drawn upon in this report is too broad to support a definitive conclusion on the impact on past projects of potential inefficiencies in equity pricing. However, it raises a concern that the public sector is paying more than it should for equity investment. There appears to be definite scope for improving the value for money from using equity investment in future government projects. These considerations, together with learning points from our other recent reports on project delivery, need to be part of authorities' wider analysis of when the use of private finance is appropriate for future projects.
17 The Treasury does not wholly accept the views of the National Audit Office (NAO) and it has asked us to include the following text:
"The Treasury agrees that this is the right time to assess the value for money of the PFI delivery model, reflecting on the nearly twenty years of experience of PFI projects, and agrees with the NAO that there should be scope for improving the value for money from using equity investment in future government projects. The Treasury considers that this aim needs to take into account a wider range of issues that together contribute to the overall economics of a transaction, rather than merely looking at equity returns on their own. This is what the Treasury is currently doing through its call for evidence on PFI reform launched in December 2011. Investors' pricing of equity is inextricably linked to the other terms of a project, which together determine the overall commercial opportunities and risks of the transaction. Prices are agreed with the private sector in response to a competition - in each case where the sponsors of bids are able to bid the lowest equity returns that would enable them to offer the most competitive market pricing at the time for the services required and the risks transferred."