50. There has long been controversy about the treatment of PFP liabilities in public accounts. Public bodies are expected to choose the best procurement route to deliver public service and good value for the taxpayer. But many witnesses said the reality was very different with the choice substantially skewed by institutional bias towards PFPs, often, in their words, the "only game in town".
51. Sir Peter Dixon, University College London Hospitals, said of PFPs: "In health … for the last ten years it has been the only source of finance and therefore one has used it." He added: "Where local government did use PFI for housing improvement, it was typically because they had no other source of capital funding" (Q 310). The Foreign and Commonwealth Office reported: "We specifically would not have had sufficient capital funding to build the Berlin Embassy without PFI" (p 303).
52. Many witnesses believe that the Government prefers PFP because many PFPs have been off public authorities' balance sheets on the grounds that the balance of financial risk was with the private sector (Centre for International Public Health Policy at Edinburgh University p 132, BMA p 254).
53. The National Audit Office concluded: "Public authorities often have no alternative source of funding and feel pressured to use private finance because its treatment in financial accounts and budgets make it seem more affordable from the public authority's perspective." The NAO found this not only affected how a project was funded but often led public bodies to "shape the project to ensure it is off-balance sheet" (NAO p 86, p 95).