Magazine article Public Finance

Standing by the PFI

Magazine article Public Finance

Standing by the PFI

Article excerpt

The Private Finance Initiative is a UK success story, despite the claims of Dave Prentis in Public Finance ('PFI in the sky', June 22-28). The rapid modernisation of our public services over the past 15 years would not have been possible without it. It has delivered projects on time and to budget. And it has helped to transform service delivery in areas ranging from improved learning environments in schools to better housing in urban regeneration projects.

By encouraging long-term planning, the PFI ensures that our new and refurbished hospitals, schools and other municipal buildings should be as fit for purpose at the end of 25-year contracts as they were at the start.

What is more, its projects are achieving value for money and transferring risk to the private sector. Private sector contractors, not the public purse, pick up the bill if things go wrong. And it is meeting wider social and environmental goals, driving innovation and focusing on user satisfaction.

International demand for British PFI expertise would never be in the robust state it is if the model wasn't producing results. European Union member states and countries as far flung as Japan, Australia and South Africa are on the PFI trail.

But this success should not lead to complacency from business or from the public sector. A report on the PFI published by the CBI just a few weeks ago recognises both how far we've come and how much further we need to go. As society changes, so the initiative should evolve to meet people's needs. And this is happening.

The Local Improvement Finance Trust model is being used to redesign and build GP practices and community hospitals. Although similar to the PFI, Lift involves greater collaboration between public and private partners in the design and project planning stages.

The CBI knows that new models such as this are needed to build in more flexibility to deal with future uncertainties in public demand and changing political priorities. We want the government to spell out the benefits of the PFI and of new partnership models to the public. It needs to show how these fit in with its vision of modern public services.

Market forces, properly managed, can be a great force for good in the delivery of public services. They drive efficiency and focus providers on delivering what people want. But this requires better commissioning and public procurement skills, with more interaction between sectors to share expertise. Competitive supply markets can function only if they are managed by professional staff, who have the right rewards and incentives to succeed.

There must also be transparency and rigour in the tendering process, with procurements driven by outcomes, not processes. …

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