The Treasury Select Committee has today published the Government's response to its report into Private Finance Initiative (PFI) funding, alongside a short report commenting on recent progress and highlighting ongoing areas of concern
Comments from the Chair
Commenting on the Government's response and recent developments, the Chair of the Treasury Select Committee, Andrew Tyrie MP, said:
"PFI funding must deliver the best possible value for money for the taxpayer.
It is clear this was not the case in the past.
I am pleased the Government has taken steps to remedy this and that it has taken on board many of the conclusions contained in the Treasury Committee's report.
However, the response does not fully address our argument that the system of national accounting continues to provide an incentive to use PFI because such liabilities are excluded from Public Sector Net Debt.
We must avoid using PFI solely as a means of placing Government finance off-balance sheet. Value for money is crucial.
PFI may be a suitable vehicle for investment, when the risks associated with future demand and usage of an asset can be transferred and when the benefits of private sector management of a project outweigh the higher cost of capital.
At a time when banks are constrained in their ability to fund such projects, it is right we explore other mechanisms of private sector funding, as laid out in the National Infrastructure Plan 2011.
However, the Government must be cautious about taking on further contingent liabilities or providing guarantees that could lay additional costs at the door of future taxpayers."