Private Finance Initiative and off balance sheet debt

Embargo: Immediate Thursday 16 July 2009

Contact: Owen Williams 020 7219 8659

LORDS ECONOMIC AFFAIRS COMMITTEE TO INVESTIGATE PRIVATE FINANCE INITIATIVE AND OFF-BALANCE SHEET DEBT

The House of Lords Economic Affairs Committee has this week launched a new inquiry into Private Finance arrangements such as PFI schemes and how they are used to fund public sector infrastructure projects.

Its inquiry will consider many aspects of the use of Private Finance arrangements including an assessment of the performance of PFI schemes and how future payments by the Government under PFI should be recorded in public sector accounts. There have been concerns raised in the past that PFI has been used to get public sector debt 'off-balance sheet'.

The Committee is keen to receive written evidence on this issue from any interested parties. The deadline for the submission of written evidence is 25 September 2009.

Questions the Committee will invite evidence on include:

  • How should the costs and benefits of PFI schemes be assessed? Is enough information on PFI projects disclosed to allow a proper assessment of their value for money for the taxpayer?

  • Is the risk transfer from the public to private sector in PFI schemes more apparent than real?

  • How effective and costly is the monitoring of private sector providers' performance in Private Finance projects?

  • How should public liabilities under PFI schemes be accounted for? Should such liabilities be included in the national debt?

  • Would public sector investment in the last decade have been lower without PFI?

  • What impact has the financial crisis had on new Private Finance projects?

  • Is there an optimal mix between conventional public procurement and Private Finance for public sector investment? What is the long run role for private finance in the delivery of public sector infrastructure?

  • Are there alternative models to PFI which might prove more effective?

Lord Vallance, Chairman of the House of Lords Economic Affairs Committee, said:

"Private Finance arrangements, and the PFI in particular, have been widely used to finance public sector infrastructure over the last decade.

"We feel the time is right for a comprehensive assessment of their benefits and weaknesses.

"We will explore the successes and failures of PFI schemes that have been completed, will look at how effectively risk is transferred from the public to the private sector under PFI and will consider how the public sector debt commitments PFI generates are treated. Often these commitments span periods of up to 30 years so it is important we assess whether that debt is being properly recorded."

Notes to Editors

1. The Committee welcome the submission of written evidence from all interested parties. The deadline for the submission of written evidence is Friday 25 September 2009

2. Full details of the Committee's inquiry including the full Call for Evidence and details of where and how to submit evidence can be found here: http://www.parliament.uk/parliamentary_committees/lords_economic_affairs.cfm