2. How far are your reservations about the PFI based on the procedure itself, and how far is the problem that government funding levels and procedures have not adapted enough to the shift to private finance projects?
It may be that the problems associated with PFI are insuperable. Because of the financial complexity and long-term nature of PFIs, transaction costs-such as those associated with tendering, bidding and writing contracts-are high relative to other forms of procurement.
It is not the case that government procedures are not adapted to PFI. Indeed, the whole of government has changed to accommodate PFI. However much of the in-house expertise that was in government has been lost, such that both sides are using management consultants who are often working on both sides of the table, depending on which contracts they hold. The extraordinary level of contract standardisation in the PFI market has also not resolved this problem.