1 The Infrastructure Challenge

The next steps to secure long-term value for money

The 2007 Comprehensive Spending Review set out how the Government is progressing its ambition to create world-class public services that can respond to people's rising aspirations while equipping the UK for global change. It set out a new strategy for transforming public services over the decade ahead based on driving forward the next stage of reform and increasing investment while embedding value for money across government. Budget 2008 updates the analysis of the strategic challenges facing the economy, highlighting the importance of infrastructure in delivering not only public services that meet people's needs and expectations, but also economic prosperity and growth.

To build on this strategy, this document sets out the next steps the Government is taking to secure value for money in its procurement of significant assets, infrastructure and long-term service provision. In doing so, it recognises the continually evolving needs of the public sector, and also the changing approaches to complex procurement that have been developed over the past 15 years, and that will continue to develop, in many cases building on experience of the Private Finance Initiative (PFI). It outlines a framework for infrastructure procurement that is designed to drive value for money across the full range of procurement approaches and ensure the effective scrutiny of key projects, while continuing to improve public sector procurement and commercial skills. Through this, the Government intends to build on the techniques and processes learnt in PFI and apply them across a wider procurement spectrum.

The document:

• analyses in broad terms the changing investment needs and challenges for the Government;

• sets out a range of approaches that have developed to address complex procurement issues;

• outlines the role of private finance and the important contribution it can make;

• illustrates the key principles and drivers of value for money that public sector procurers need to use to evaluate a broad range of procurement approaches; and

• sets out how the Government is developing a more risk-based, systematic approach to the scrutiny of major projects, while providing support to them and further enhancing the skills of the public sector.

This document outlines the Government's approach both in order to assist public sector procurers and to act as a basis for further dialogue between the public and private sector on how the Government can best meet its investment needs and help drive value for money solutions in complex procurement. The policy proposals have direct effect only in England, as policy is devolved in Scotland, Wales and Northern Ireland.