Private Finance Initiative (PFI) Review: response to HM Treasury’s Call for Evidence

We welcome the PFI Review which provides an opportunity to enhance PFI as an important tool for enabling the Government to meet its objectives using private sector capital and expertise. The financial and related professional services sectors are willing partners in helping Government to facilitate the change necessary to support the UK economy and society.

PFI can help provide the schools, hospitals and roads we need in the UK and, through the UK’s successful PFI cluster, deliver both inward investment and export growth. Our response makes the following recommendations to ensure that the UK can continue to gain from these benefits:

1. Change the narrative surrounding PFI to focus on the benefits that it offers to the UK and other countries seeking to develop and modernise their infrastructure;
2. Encourage institutional investment in public assets and services by providing credit enhancement for large PFI projects along similar lines to the current EU proposals such as first-loss protection, and addressing the impediments presented by Solvency II to the continuing presence of insurance companies in the market;
3. Help to overcome the problems presented by re-financing risk by underwriting re-financing after the construction phase of a project;
4. Ensure that we learn from best practice overseas by cutting down the length, cost and complexity of the procurement process in the UK, and
5. Adopt a more centralised procurement agency-led approach, along the lines of Infrastructure Ontario, on the grounds that this could help to concentrate expertise and enhance the efficiency of the PPP market.

We will continue to work with our members to promote the UK’s expertise in meeting the international demand for infrastructure. As a pioneer in this field, UK practitioners have a wide and deep range of knowledge to draw upon, based on historically the largest and most wide-ranging set of public service projects in the world.  

We look forward to working in partnership with government to ensure that that PFI, or its successor model in the UK, can foster a stable, supportive political environment that promotes confidence amongst practitioners, investors, consumers and the wider public.

TheCityUK has just released its 2012 overview of the key role the private sector, through public private partnerships, has in meeting long term demand for infrastructure. To download report click here.