1. Private finance has helped to deliver a broad range of modern, fit-for-purpose assets that include high-quality services and maintenance activities to ensure that the investment retains its value and that services meet public demand over the long term. Without this long-term investment, the UK would not have the infrastructure required to support our economy, nor the public services that are needed.
2. This response argues that private finance projects are delivering value and quality in public services and that despite the credit crisis, PFI is still a strong investment vehicle, with deals continuing to close and market confidence resurging. PFI has delivered policy outcomes that benefit both individual service users and the wider community, and has offered greater value for money over a project's lifetime than traditionally procured services. The attributes of PFI have also been captured by other models that can be applied to meet different types of asset and service needs.
3. The CBI believes that for PFI to continue delivering quality and value in public services, the government needs to have a more strategic and coordinated approach to their public service investment, ensure that public sector procurers are sufficiently skilled and capable of managing complex projects, and undertake robust quantitative analysis between privately-financed and traditionally-procured projects in order to illustrate the value for money credentials of each.
4. The introduction of the Private Finance Initiative (PFI) model brought a step-change in the way public services were financed, designed, built and operated. Many aspects distinguish it from conventional procurement, making it attractive for commissioners seeking to deliver high-quality, financially-sound investment. These aspects include:
- Integration of project design and service delivery.
- Effective risk sharing between partners.
- Increased transparency and accountability.
- Greater focus on long-term value and sustainability.
- Flexible enough to allow changes to services.
5. The UK public private partnership (PPP) market has since evolved, demonstrating its ability to meet new public service investment and delivery challenges, and the CBI has played an important role facilitating dialogue between lenders, providers and procuring authorities, which has produced tangible improvements to projects on the ground. Regardless of whether projects are on or off balance sheet, PFI ensures genuine financial transparency in all aspects of the service in a way that in-house provision prohibits.
6. As financial and service level complexities have increased, requiring more flexible models, the PFI has been modified to meet these needs while retaining its fundamental benefits. Private finance projects continue to be a reliable and efficient means of improving outcomes for users whilst delivering value for money to the public sector.