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128/11

15 November 2011

Government plans to reform PFI model

The Government will review the private finance initiative (PFI) and consider other delivery models, the Chancellor announced today. The objective of the review, led by the Treasury, is to create a new model for delivering public assets and services that takes advantage of private sector expertise, but at a lower cost to the taxpayer.

The Government’s approach to reform the PFI model will look to create a model which is cheaper, accesses a wider range of private sector financing sources and strikes a better balance of risk between the private and the public sectors.The review will create a model which:

The Treasury will be launching a call for evidence on 1 December 2011 that will make full use of the wealth of experience across the public and private sectors and learn the lessons of the past twenty years of PFI. The Treasury will also be looking to retain the benefits of the PFI model, including getting projects delivered to time and to budget, and giving the private sector the right incentives to effectively manage risk.

The Chancellor, George Osborne, said:

“We have consistently voiced concerns about the misuse of PFI in the past and we have already taken steps to reduce costs and improve transparency.

”But the review I have announced today will take this a step further with a fundamental reassessment of PFI. We want a new delivery model which draws on private sector innovation, but at a lower cost to the taxpayer and with better value for public services.”

Notes for Editors

1. The Written Ministerial Statement announcing this reform can be found in the Infrastructure UK section of this website.

2.  This Government has consistently expressed concerns about the misuse of PFI and has already announced a number of significant steps in order to improve the cost effectiveness and transparency of PFI, including:

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