7  Efficiency and value for money

PF2 will offer improved value for money for the public sector and the taxpayer. The reform measures taken to achieve this include the introduction of:

•  public equity co-investment in future projects to ensure better alignment of objectives, greater transparency and improved value for money;

•  an improved procurement process to accelerate delivery, ensuring procurement is faster and cheaper than in the past, and improved public sector procurement capability;

•  flexible service provision through the separation of soft facilities management services and the public sector having discretion on the inclusion of some minor maintenance activities;

•  an open book approach to lifecycle costs together with a gain share mechanism for any surplus lifecycle funds;

•  increased flexibility on the level of capital grant that authorities can make to projects, without disrupting the transfer of risk to the private sector; and

•  measures to encourage the assessment and use of a greater range of debt financing sources to secure affordable, value for money long-term debt finance.

The Government announced its commitment, in July 2011, to deliver at least £1.5 billion in savings from operational PFI projects in England:

•  contracting authorities have reported over £1.5 billion of committed efficiencies and savings with a further £1 billion in discussion; and

•  valuable lessons have been taken from the review of existing projects and incorporated into new PF2 policy, including transparency to enable projects to manage contracts efficiently.

There are a variety of contracting options which, compared to PF2, adopt different approaches to the allocation of design, construction, financing, asset maintenance and operational responsibilities between the public and private sector. Assessing the value for money of contracting approaches requires a comparison of alternatives. The Government will update the existing Value for Money Assessment Guidance to reflect a wider range of contracting options. The updated guidance will be published for consultation in spring 2013.