144. The impact of the credit crunch on competition in private finance projects has been unclear. Sir John Bourn said: "The credit crunch-through its limitation of access to funds, making them more expensive, lending money for a shorter period-has tended to reduce competition" (Q 357). But the slowdown in construction generally due to the downturn may have freed up more contractors to bid for private finance work. Mr Rylatt said: "In the current construction environment there is not a lot of conventional work around, for obvious economic reasons. The market is very, very much a buyer's market at the moment and is not a seller's market" (Q 185).
145. High bidding expenses risk reducing competition for private finance projects which, in turn, could increase costs to the taxpayer. The Government should examine possible mechanisms for encouraging competition, such as returning an element of bid costs.