HM Treasury publishes an annual database listing current projects which have already been agreed and signed. The most recent version of this database2 lists 728 projects, with a capital value figure (total worth of infrastructure assets) of just over £56 billion. This data shows that the use of PFI was at its highest in 2007/08, and has since declined (see figure below). This decline was seen following the introduction of tighter regulations on banks (under Basel III, a global voluntary regulatory framework), which increased lending costs for long term debt:

Banks are responding to this accord by reducing risk-weighted assets rather than increasing equity capital. One way of doing this is to reduce lending to sectors such as infrastructure, which require funding instruments with long maturities.3

Additionally, PFI projects experienced an increase in costs and charges following the financial crisis, due to a reduction in available financing.4

In 2013/14, nine projects were agreed, with a capital value of £1.4bn. In comparison, in 2007/08, 62 projects were agreed, with a capital value of £8.4bn. There are 11 projects in procurement at present.

At present, there are 728 PFI projects which have already been agreed to, and 11 projects in procurement (as of 31 March 2014)

PFI was widely used in mid 2000s, but has declined since its peak in 2007/08

Department

Capital value


(£ million) 

Unitary charge payments: 2015/16

(£ million)

Total unitary charge payments: 2015/16 onwards
(£ million)

Number of PFI projects

Department of Health

12,083

2,025

66,315

123

Of which NHS

11,845

1,961

64,944

105

Ministry of Defence

9,043

1,838

31,871

41

Department for Transport

7,879

1,238

27,592

62

Department for Education

7,800

1,082

22,254

168

Scottish Government

5,690

985

22,284

83

Other departments

14,060

3,299

51,878

251

Total

56,554

10,467

222,194

728

Box 1: Accounting for PFI projects in the National Accounts

National Accounts use the European System of accounts (ESA) to distinguish between on and off balance sheet debt. If the risks and reward of a project is believed to be passed to the private sector, it is not recorded in the government borrowing figures, and remains off balance sheet. Approximately 90% of all PFI investment is off balance sheet, and is not recorded in National Accounts.5 Public spending statistics, such as the Public Sector Net Debt, also follow ESA.

The Office for Budgetary responsibility (OBR) states the following in relation to the off balance sheet classification for the majority of PFIs:

As well as lacking transparency, this generates a perception that PFI has been used as a way to hold down official estimates of public sector indebtedness for a given amount of overall capital spending, rather than to achieve value for money.6

Only the PFI contracts recorded on the balance sheet of the National Accounts feed into Public Sector Net Debt figures. The OBR has stated that if all of the investment carried out through PFI was carried out through conventional debt financing, Public Sector Net Debt would have increased by 2% of GDP.7