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3.  Witnesses have told us that PFI has enabled a major updating of the NHS estate that would have not been possible otherwise. Do you agree?

This is possibly true. But it is only true because of the peculiarity of New Labour's fiscal rule that the proportion of public debt to GDP should be kept below 40%. Why the link? Because financing public investment through PFI was seen as a way of achieving this rule (see my earlier evidence and the foreword to the NAO's evidence).

The NHS was held back up to 1997 by underfunding under the Conservative governments of 1979 to 1997. The increase in NHS investment under the Blair and Brown governments has been admirable but most of it was financed through the PFI (over 2000-07, about three-quarters of all new hospitals were PFI projects- Edwards C, June 2009, 6)

PFI has been attractive to the Blair and Brown governments because most of the PFI investment has been off-balance sheet and not included in the debt figures. Thus much of the expansion of the investment in the NHS has been through the PFI. This was much-needed investment but was only done through PFI because it linked up with a macro-economic policy tied to a very low debt-to-GNP target.