By David Williams
4 November 2010
In the CSR, Chancellor George Osborne set out plans to transfer responsibility for the revenue costs of local government PFI projects to the sponsoring department. This would assert more central government control over the schemes’ performance, while removing ‘perverse incentives’ in favour of the PFI.
Osborne also backed four local transport PFI projects – but only on the condition that the government would work ‘urgently’ with councils to make the schemes affordable. And he pledged to remove government support from seven waste disposal projects.
Tony Poulter, head of government and infrastructure at PricewaterhouseCoopers, told PF that the CSR and NIP would bring in severe cuts to capital spending and a focus on large-scale infrastructure projects rather than hospitals and schools.
As a result, the PFI was not likely to play such a major role over the next four years as it had in the past decade, he said. ‘It’s not the end of the PFI, but it is a sign that we’re going to see a wider range of approaches. There’s a thread through all this about getting better value for money, looking at where the costs are uncompetitive and making sure we have the best commercial structures to keep down the cost of capital.’
Derek Potts, business development director at infrastructure developer John Laing, said the PFI remained ‘relevant to the government’ and other public-private partnership models could come into play.
But Tim Care, PFI specialist at law firm Dickinson Dees, said: ‘The PFI is an easy target because there has been waste – and that is so much a part of the coalition agenda, it’s probably inevitable that they would take this stance.’
The Treasury will shortly publish a technical paper on the use of the PFI.
4 November 2010
The Private Finance Initiative appears to have fallen out of favour with ministers as the scheme’s value for money has come under scrutiny, Public Finance has been told.
The Comprehensive Spending Review and subsequent National Infrastructure Plan both indicate a shift away from the PFI – but commentators are split on whether the scheme has a future.In the CSR, Chancellor George Osborne set out plans to transfer responsibility for the revenue costs of local government PFI projects to the sponsoring department. This would assert more central government control over the schemes’ performance, while removing ‘perverse incentives’ in favour of the PFI.
Osborne also backed four local transport PFI projects – but only on the condition that the government would work ‘urgently’ with councils to make the schemes affordable. And he pledged to remove government support from seven waste disposal projects.
Tony Poulter, head of government and infrastructure at PricewaterhouseCoopers, told PF that the CSR and NIP would bring in severe cuts to capital spending and a focus on large-scale infrastructure projects rather than hospitals and schools.
As a result, the PFI was not likely to play such a major role over the next four years as it had in the past decade, he said. ‘It’s not the end of the PFI, but it is a sign that we’re going to see a wider range of approaches. There’s a thread through all this about getting better value for money, looking at where the costs are uncompetitive and making sure we have the best commercial structures to keep down the cost of capital.’
Derek Potts, business development director at infrastructure developer John Laing, said the PFI remained ‘relevant to the government’ and other public-private partnership models could come into play.
But Tim Care, PFI specialist at law firm Dickinson Dees, said: ‘The PFI is an easy target because there has been waste – and that is so much a part of the coalition agenda, it’s probably inevitable that they would take this stance.’
The Treasury will shortly publish a technical paper on the use of the PFI.
