3.7 The emergence of the secondary market may bring benefits to the public sector by attracting more investors into the PFI market. As the supply of equity in PFI projects increases this should, assuming efficient markets, drive down the relative cost of equity and bring benefits to the public sector in the pricing of PFI projects. The Treasury has said that it considers there is scope to reduce the returns of around 13-15 per cent which investors expect when PFI projects are bid for.
3.8 In addition, the public sector can learn from the management techniques employed by SMFs to reduce the operating costs of a portfolio of PFI projects. The Treasury has an ongoing initiative to also seek to identify ways in which operating costs can be reduced. It notes that it always encourages and welcomes efficiency in its supply chains and would expect any efficiencies which the SMFs introduce to be reflected in the prices which they bid in future PFI procurement competitions.