7. Question 7-Would public sector investment in the last decade have been lower without Private Finance? If so, by how much?
7.1 In HM Treasury's 2008 report "Infrastructure procurement: delivering long-term value", the part played by PFI in delivering UK infrastructure is strongly emphasised, but kept in perspective. It states that ". . . [although], the vast majority of investment in the UK's public services has been, and will continue to be, procured through conventional means . . . the PFI programme continues to play a small but important plan in the Government's investment plans . . .". PFI has delivered very large number (over 500) of large infrastructure projects since its inception, so there is no question that it has played an important role. It is difficult to assess hypothetically whether traditional procurement would have been able to deliver to the same extent, but the evidence of comparative performance of the latter suggest that it would not have done. It is clear that the past decade has witnessed the most active period of infrastructure investment within the UK since the period of mass reconstruction after the Second World War and privately financed projects have made a significant contribution to this activity.
7.2 For example, since May 1997 Department of Health data identifies that projects totalling £10,878 million have been procured through private finance. To give some examples, in its 2008 report10, HM Treasury noted that: in education, the total schools capital investment rose from less than £700 million in 1996-97 to £5.9 billion in 2007-08, and is projected to rise in 2010 to £8.2 billion; and in health in the same period 70 PFI (and 23 traditionally) procured hospital schemes were completed, and as at the time of the report another 27 PFI (and seven public capital) projects were under construction, modernising the NHS estate such that only 20% of the NHS estate is pre-1948 (down from 50% in 1997). This demonstrates the significant contribution made by PFI to investment in NHS infrastructure over the last decade.
7.3 As illustrated by the independent findings comparing the performance of private and traditional projects cited in our response to Question 2, a major benefit that private finance has yielded for the public sector is cost certainty. This certainty has enabled it to plan effectively for long-term infrastructure renewal within the UK; and has enabled the UK Government to embark on a very large volume of projects.