1 The purpose of this paper is to help the Lords Economic Affairs Committee with its inquiry into the use of private finance in the delivery of public services.
2 The paper draws on the independent analysis of the National Audit Office (NAO) in this field. The NAO has published 72 reports on the value for money (VFM) of using private finance over the past 12 years. The NAO has also considered the accounting treatment of over 100 projects1 using private finance in our audits of the financial accounts of central Government.
3 Private finance projects are typically long term contractual arrangements between public authorities and private sector companies with funding raised by the private sector companies. The authorities manage the tendering, governance and contractual relationships for the public sector.
4 This paper uses the term private finance projects to refer to all forms of public-private partnerships (PPPs). The range of PPPs is described in Figure 1, Part 1. We have mainly concentrated on the widely used PPP model called the Private Finance Initiative (PFI). As of September 2009, there were over 500 operational PFI projects in England, with a capital value in excess of £28 billion. There are also hundreds of other types of PPPs, ranging from small joint ventures to the London Underground PPPs which have a capital value of £18 billion.
__________________________________________________________________________________
1 There is limited aggregate information on non-PFI public-private partnerships, and no single list of them all. We have not counted the number of joint ventures, investments, and contractual agreements that we audit which could also be considered as PPPs.