10. Is there an optimal mix between conventional public procurement and Private Finance for public sector investment? What is the long run role of private finance in the delivery of infrastructure both in the UK and globally?
The optimal mix depends: This can only be determined by reference to projects under consideration during a particular period-some projects are better suited to a PFI structure, and others to traditional procurement methods, as demonstrated by the fact that only 10-15% of spending on public services is on PFI projects. Only those projects suited to PFI should be structured in that way. So there can be no hard and fast rule as to what the proportions of each should be in any given period-it will change with the projects coming up in accordance with Government policy.
The UK is ahead of the game: The UK PFI market has acted as a pathfinder in the global PFI market in the development of models for private sector investment in public assets. It has built up a considerable skills base, in both the public and private sectors. And it has led the way in standardisation of documentation, in the development of public and private sector guidance on the letting of PFI contracts and their ongoing management and scrutiny, and in the development of a vibrant secondary market in PFI projects. The UK is now looked to by many jurisdictions for best practice, and is exporting its private and public sector expertise to other jurisdictions. This is something that the UK should promote.
PFI is here to stay globally: The interest in using PFI as an investment tool is growing across the world, and plays a key role in the investment strategies of the UK and other major economies such as the US, the Middle East, Canada, Australia and India. The size of the global PPP market in 2008 was US$71,225 million, with 212 deals closing. The UK is ahead of the curve in its embrace of PFI in public sector infrastructure investment, and in its development of a sophisticated PFI market, a fact of which the UK Government and public service, and the private sector, can be proud.