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Public Accounts Committee
Report published 20 June 2018. Awaiting Government response.
Since the 1990s, successive governments have used Public Private Partnership intiatives known as PFI and PF2 to fund assets such as schools and hospitals. These allow private money to finance public projects.For a PFI or PF2 project, a private company called a Special Purpose Vehicle is set up to borrow money from a bank which is uses to fund a public asset. The taxpayer then pays back the Special Purpose Vehicle over a period of around 30 years.
According to a National Audit Office (NAO) report on PFI and PF2, there are currently 716 operating Public Private Partnerships with a capital value of £60 billion. Future charges on these Partnerships could continue to the 2040s costing around £199 billion.
The NAO report found that government use of Public Private Partnerships had dropped from a peak of £9 billion in 2007–08 to £0.5 billion in 2016–17. This was in part because the financial crisis made borrowing through Special Purpose Vehicles more expensive than it had previously been. The report also found that Public Private Partnerships were relatively expensive, with initial finance for projects costing up to 5% more than publicly-funded initiatives, and small variations in costs of financing having large cash-terms consequences.
The Committee will ask HM Treasury and the Infrastructure and Projects Authority whether Private Finance Initiatives are delivering value for money for the taxpayer, how they will keep costs down over the decades ahead, and what they have learned about how best to finance public projects.
Read all transcripts, written evidence and other material related to the inquiry on Private Finance Initiatives.
Public Accounts Committee report finds Government needs to level with taxpayers about model's value for money