● By April 2011, across the public sector, more than 700 PFI contracts had been signed in the United Kingdom with an estimated capital value of almost £50 billion in England alone and annual repayments estimated at £8 billion for 30 to 60 years.
● PFI has been the dominant form of procurement for large national health service (NHS) projects. More than 90% of the £11.6 billion of capital expenditure contracted to take place under England's hospital-building programme has come through PFI. By April 2009, 101 of the 133 new hospitals built between 1997 and 2008, or under construction, were privately financed.
● PFI costs drive service closures, bed and staff reductions due to the high cost of debt servicing and enormous transfers of resources from patient care to bankers, shareholders and financiers.
● PFI lacks accountability as the contracts are secret and hidden from public view.
● PFI involves a long term, 30 to 60 year, contract between the public and the private sector.
● Sovereign debt is always cheaper that finance borrowed privately for individual investments ('project finance'). Successive governments have argued that the higher cost of private finance reflects risk transfer to the private sector, which generates savings that outweigh the extra cost. However, risk can be transferred to the private sector by using fixed price contracts and public borrowing instead of private finance.
● Although governments justify PFI on cost efficiency grounds, they are usually thought to adopt the policy for fiscal not efficiency reasons. Most PFIs are not included on the public balance sheet and do not count as part of public borrowing totals. New investment can therefore be undertaken without any immediate increase in government spending or debt.
● The implications of manipulating spending figures and public sector debt in this way have serious long term implications.
● PFI simply alters the timing of payments to creditors; it does not eliminate them or bring extra resources. There is no economic case for off-balance sheet treatment.
● PFI borrowing costs are consistently higher than public borrowing costs. In 2002, Audit Scotland reported PFI borrowing rates 2.5% to 4% higher than the rates at which a public authority would have been able to borrow. In a study of the first 12 PFI hospital projects in England, Shaoul et al. (2008) found private finance costs of about 8% - well in excess of the 4.5% available on public finance at the time.
● The difference between public and project rates of interest increased following the banking crisis. In 2011, the House of Commons Treasury Committee concluded that the cost of capital for a typical PFI project at that time was double the long-term government gilt rate.
● High financing costs include 'unfair' rates of return. PFI rates of profit have been shown to be excessive, that is, higher than conventional profitability for equivalent projects. In 2012, the National Audit Office (parliament's financial watchdog) reported that "the public sector may often be paying more than is necessary for using equity investment".
● PFI financing costs have recently been implicated in fraudulent manipulation of the interbank lending rate, or Libor.
● Many PFI companies avoid taxes by registering off-shore and using transfer pricing. In 2011, the House of Commons Treasury Committee reported a pattern of higher rates of profit and low corporation tax payments by highways PFI projects. In 2012, it was calculated that 91 shareholder companies investing in UK PFI infrastructure funds are located in tax havens and therefore not liable to capital gains tax. The funds had interests in a total of 314 PFI-created assets.
● High interest rates and excess returns affect levels of debt repayment. Cuthbert and Cuthbert calculated annual debt repayment to PFI consortiums between 1.49 and 2.04 times higher than the amount that would have been charged to the UK government if it had borrowed directly for the construction. In 2001, a parliamentary inquiry found that "the government could have secured 71% more investment by borrowing on its own account."
● There is substantial evidence that value for money assessments have reflected a pro-PFI bias by giving the false impression that PFI projects are less costly than traditional procurement alternatives.
● The high cost of PFI services and debt repayment has had a serious impact on NHS services by creating an affordability gap. The first wave of hospital PFI projects was associated with average cuts in bed numbers of around 30 per cent and reductions in staffing.
● There is a correlation between the presence of large PFI building projects and hospital deficits and reductions in services and staff.
● The hospital payment system had underfunded 40 PFI hospital by 2005/06
● Annual PFI payments increase year-by-year because they are indexed to inflation. This is exacerbating affordability problems at a time of real term reductions in public expenditure and high inflation.
● The government has activated a bankruptcy and closure regime to deal with the financial crisis among public hospitals but has not sought to renegotiate contracts.
● PFI policy has suffered a lending crisis since the financial crash as the cost of bank borrowing has increased sharply. In 2011, the UK Treasury published proposals to reform PFI by moving to a model in which lending would be secured against user charges like tolls, equivalent to tax-farming, a system of contracting out tax-raising powers to private bodies.