33. The underlying principles of PFI have been adopted in new models of public private partnership (PPP) that have been created to meet specific policy challenges, and are even more flexible in the way they deliver public services. These models include those used in the Local Improvement Finance Trust (LIFT) programme in the health sector and the Building Schools for the Future (BSF) programme.
34. The Treasury has acknowledged the evolution in the private finance market and the benefits the new models can bring to public service delivery.14 The CBI has also urged greater use of the range of models available in public service delivery,15 all of which retain the benefits of PFI while supplementing them with new features to deliver greater value for money and more responsive public services.
35. These models often involve joint ventures, which enables strategic planning and procurement decisions to be taken by all project partners. This gives more strategic direction to the project and as the private sector is given greater involvement in planning for implementation, the feasibility of all stages of the project is ensured.
36. Like PFI, risk is still spread over a long contract period. Often the risk is spread over a number of projects, allowing the public and private sector partners to gain experience of working together as a joint venture company and also of working with their supply chain partners over time. The benefits of this momentum are evident in the Brent, Harrow and Hillingdon (BHH) LIFT company, whose success in earlier projects from 2004 onwards gave them the necessary confidence and experience to design a more complex scheme in 2008.16 In addition, procurement times are shorter for these models which results in savings for the procuring authority.17
37. The prime contracting model also employs crucial elements of PFI such as supply chain management and whole-life costing that help to deliver better outcomes and value for money, but using public sector finance. This has worked well for projects in which high levels of uncertainty make them unsuitable to PFI
such as for the defence sector.
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14 "PFI: strengthening long-term partnerships," Treasury, 2006
15 "Building on success: The way forward for PFI," CBI, 2007
16 BHH LIFT Company's new scheme was the first to utilise full PFI credits from the Department of Health and required the development of a Land Retained Agreement (LRA) as the sites to be developed belonged to the council. These complexities were overcome due to strong experience and good relations between all stakeholders.
17 "Department of Health innovation in the NHS: Local Improvement Finance Trusts," National Audit Office, 2005