Editing Private finance initiative

{{Short description|United Kingdom government procurement policy}}
{{Use dmy dates|date=May 2020}}
{{Neoliberalism sidebar |expanded=all}}
The '''private finance initiative''' ('''PFI''') was a [[His Majesty's Government|United Kingdom]] [[government procurement]] policy aimed at creating "[[public–private partnership]]s" (PPPs) where private firms are contracted to complete and manage public projects.<ref>{{cite web|url=http://www.investopedia.com/terms/p/privatefinanceinitiative.asp |title=Private Finance Initiative (PFI) |publisher=Investopedia.com |access-date=2017-10-31}}</ref> Initially launched in 1992 by [[Prime Minister of the United Kingdom|Prime Minister]] [[John Major]], and expanded considerably by the [[Premiership of Tony Blair|Blair government]], PFI is part of the wider programme of [[privatization|privatisation]] and [[macroeconomics|macroeconomic]] public policy, and presented as a means for increasing accountability and efficiency for public spending.<ref name=barlow>{{cite journal |first1=James |last1=Barlow |first2=Jens K. |last2=Roehrich | first3=Steve |last3=Wright |year=2010 |title=De facto privatisation or a renewed role for the EU? Paying for Europe's healthcare infrastructure in a recession |journal=[[Journal of the Royal Society of Medicine]] |volume=103 |issue=2 |pages=51–55 |doi=10.1258/jrsm.2009.090296 |pmid=20118334 |pmc=2813788
}}</ref>

PFI is controversial in the UK. In 2003, the [[National Audit Office (United Kingdom)|National Audit Office]] felt that it provided good value for money overall;<ref>{{cite news|url=http://www.economist.com/node/13962464?story_id=E1_TPJGNQGQ|access-date=2011-05-09|title=PFI deals in recession: Singing the blues | newspaper = The Economist|date=2011-05-09}}</ref> according to critics, PFI has been used simply to place a great amount of debt "[[off-balance-sheet]]".<ref>{{Cite web|url=https://www.publicfinance.co.uk/news/2012/01/pfi-%E2%80%98still-being-used-keep-costs-balance-sheet%E2%80%99|title=PFI 'still being used to keep costs off balance sheet' &#124; Public Finance|website=www.publicfinance.co.uk}}</ref> In 2011, the parliamentary [[Treasury Select Committee]] recommended:
{{blockquote|"PFI should be brought on balance sheet. The Treasury should remove any perverse incentives unrelated to value for money by ensuring that PFI is not used to circumvent departmental budget limits. It should also ask the [[Office for Budget Responsibility|OBR]] to include PFI liabilities in future assessments of the fiscal rules".<ref>{{cite news|url=http://www.parliament.uk/business/committees/committees-a-z/commons-select/treasury-committee/news/pfi-report/|access-date=2011-09-02|title=Committee publishes report on Private Finance Initiative funding | publisher = parliament.uk|date=2011-09-02}}</ref>}}

In October 2018, the Chancellor [[Philip Hammond]] announced that the UK government would no longer use PFI for new infrastructure projects; however, PFI projects would continue to operate for some time to come.

==Overview==
[[File:Cumberland Infirmary, Carlisle - geograph.org.uk - 74610.jpg|thumb|right|[[Cumberland Infirmary]], one of the first projects funded using the PFI]]
The private finance initiative (PFI) is a [[procurement]] method which uses [[private sector]] investment in order to deliver [[public sector]] infrastructure and/or services according to a specification defined by the public sector.<ref name=barlow/> It is a sub-set of a broader procurement approach termed public-private partnership (PPP), with the main defining characteristic being the use of project finance (using private sector debt and equity, underwritten by the public) in order to deliver the public services.<ref name=barlow/> Beyond developing the infrastructure and providing [[finance]], private sector companies operate the public facilities, sometimes using former public sector staff who have had their employment contracts transferred to the private sector through the [[TUPE]] process which applies to all staff in a company whose ownership changes.

==Mechanics==

===Contracts===
A public sector authority signs a [[contract]] with a private sector [[consortium]], technically known as a [[Special-purpose entity|special-purpose vehicle]] (SPV). This consortium is typically formed for the specific purpose of providing the PFI.<ref name=zheng>{{cite journal |url=https://www.scopus.com/record/display.url?eid=2-s2.0-41049112855&origin=inward&txGid=yXIvJQ7AsPq0YyDQfJmJLCa%3a2|last1=Zheng |first1=J. |last2=Roehrich |first2=J. K. |last3=Lewis |first3=M.A. |year=2008 |title=The dynamics of contractual and relational governance: Evidence from long-term public-private procurement arrangements |journal=Journal of Purchasing and Supply Management |volume=14 |issue=1 |pages=43–54 |doi=10.1016/j.pursup.2008.01.004 |s2cid=207472262 |access-date=30 September 2012}}</ref> It is owned by a number of private sector investors, usually including a construction company and a service provider, and often a bank as well.<ref name=zheng/> The consortium's funding will be used to build the facility and to undertake maintenance and [[Capital (economics)|capital]] replacement during the life-cycle of the contract. Once the contract is operational, the SPV may be used as a [[wikt:conduit|conduit]] for contract amendment discussions between the customer and the facility operator. SPVs often charge fees for this go-between 'service'.<ref name="Pickard 2008"/>

PFI contracts are typically for 25–30 years (depending on the type of project); although contracts less than 20 years or more than 40 years exist, they are considerably less common.<ref name="puk">{{cite web|url=http://www.partnershipsuk.org.uk/|title=homepage|publisher=Partnerships UK}}</ref> During the period of the contract the consortium will provide certain services, which were previously provided by the public sector. The consortium is paid for the work over the course of the contract on a "no service no fee" performance basis.

The public authority will design an "output specification" which is a document setting out what the consortium is expected to achieve. If the consortium fails to meet any of the agreed standards it should lose an element of its payment until standards improve. If standards do not improve after an agreed period, the public sector authority is usually entitled to terminate the contract, compensate the consortium where appropriate, and take ownership of the project.

Termination procedures are highly complex, as most projects are not able to secure private financing without assurances that the debt financing of the project will be repaid in the case of termination. In most termination cases the public sector is required to repay the debt and take ownership of the project. In practice, termination is considered a last resort only.

Whether public interest is at all protected by a particular PFI contract is highly dependent on how well or badly the contract was written and the determination (or not) and capacity of the contracting authority to enforce it. Many steps have been taken over the years to standardise the form of PFI contracts to ensure public interests are better protected.

===Structure of providers===
The typical PFI provider is organized into three parts or [[Legal person|legal entities]]: a [[holding company]] (called "Topco") which is the same as the SPV mentioned above, a capital equipment or infrastructure provision company (called "Capco"), and a services or operating company (called "Opco").  The main contract is between the public sector authority and the Topco.  Requirements then 'flow down' from the Topco to the Capco and Opco via secondary contracts. Further requirements then flow down to [[subcontractor]]s, again with contracts to match. Often the main subcontractors are companies with the same [[shareholders]] as the Topco.

===Method of funding===
Prior to the [[2008 financial crisis]], large PFI projects were funded through the sale of [[bond (finance)|bonds]] and/or [[senior debt]]. Since the crisis, funding by [[senior debt]] has become more common. Smaller PFI projects – the majority by number – have typically always been funded directly by banks in the form of senior debt. Senior debt is generally slightly more expensive than bonds, which the banks would argue is due to their more accurate understanding of the credit-worthiness of PFI deals – they may consider that [[monoline]] providers underestimate the risk, especially during the construction stage, and hence can offer a better price than the banks are willing to.

Refinancing of PFI deals is common. Once construction is complete, the risk profile of a project can be lower, so cheaper debt can be obtained. This refinancing might in the future be done via bonds – the construction stage is financed using bank debt, and then bonds for the much longer period of operation.

The banks who fund PFI projects are repaid by the consortium from the money received from the government during the lifespan of the contract. From the point of view of the private sector, PFI borrowing is considered low risk because public sector authorities are very unlikely to [[Default (finance)|default]]. Indeed, under [[International Monetary Fund|IMF]] rules, national governments are not permitted to go bankrupt (although this is sometimes ignored, as when [[Argentine debt restructuring|Argentina 'restructured' its foreign debt]]). Repayment depends entirely on the ability of the consortium to deliver the services in accordance with the output specified in the contract.

Under guidance issued prior to the reform proposals initiated in December 2011, public sector partners were permitted to contribute up to 30% of the construction costs as a [[financial capital|capital]] contribution, generally handed over at the end of the construction period and subject to appropriate risk transfer and performance regimes being in place. The government indicated in its reform consultation that allowance for higher levels of capital contribution was being considered, noting the some international practice also offered examples of higher levels of capital contribution.<ref>HM Treasury, ''Reform of the Private Finance Initiative'', December 2011, pp. 6-7, cf. HM Treasury, [https://www.gov.uk/government/news/reform-of-the-private-finance-initiative Reform of the Private Finance Initiative], ''Press Release'', published 1 December 2011, accessed 12 June 2024</ref>

===Insurance===
PFI contracts generally allocate risks to the private sector contractor, who takes out appropriate [[insurance]] to cover these risks and includes anticipated insurance costs in its PFI charges. However, it has been recognised that levels of insurance premium are variable following cyclical economic changes, and difficult to predict over the lifetime of a PFI project. PFI terms were amended in 2002 and standardised in 2006 to allow for insurance cost sharing mechanisms, whereby the client and contractor could share the risk of market fluctuation in insurance premium costs.<ref>HM Treasury, ''Reform of the Private Finance Initiative'', December 2011, p 12</ref>

==History==
===Development===
PFI was implemented in the UK by the [[Conservative Party (UK)|Conservative]] Government led by John Major in 1992.<ref>{{cite web|url=https://navigator.health.org.uk/content/private-finance-initiative-pfi-was-introduced|title=The Private Finance Initiative (PFI) was introduced|publisher=The Health Foundation|access-date=8 December 2019}}</ref><ref>{{cite web|url=https://www.cps.org.uk/files/reports/original/111028110829-PFI.pdf|title=Reforming The Private Finance Initiative|publisher=Centre for Policy Studies|access-date=8 December 2019|archive-date=28 April 2020|archive-url=https://web.archive.org/web/20200428143743/https://www.cps.org.uk/files/reports/original/111028110829-PFI.pdf|url-status=dead}}</ref> It was introduced against the backdrop of the [[Maastricht Treaty]] which provided for European Economic and Monetary Union (EMU). To participate in EMU, EU member states were required to keep public debt below a certain threshold, and PFI was a mechanism to take debt off the government balance sheet and so meet the Maastricht convergence criteria. PFI immediately proved controversial, and was attacked by Labour critics such as the [[Shadow Chief Secretary to the Treasury]] [[Harriet Harman]], who said that PFI was really a back-door form of [[privatisation]] (House of Commons, 7 December 1993), and the future [[Chancellor of the Exchequer]], [[Alistair Darling]], warned that "apparent savings now could be countered by the formidable commitment on revenue expenditure in years to come".<ref name="gfme">{{Citation| last = Monbiot| first = George| title = This Great Free-Market Experiment Is More Like A Corporate Welfare Scheme| newspaper = The Guardian| date = 4 September 2007| url = https://www.theguardian.com/commentisfree/2007/sep/04/comment.politics| location=London}}</ref>

Initially, the private sector was unenthusiastic about PFI, and the public sector was opposed to its implementation. In 1993, the Chancellor of the Exchequer described its progress as "disappointingly slow". To help promote and implement the policy, he created the Private Finance Office within the Treasury, with a Private Finance Panel headed by [[Alastair Morton]]. These institutions were staffed with people linked with the [[City of London]], and [[accountancy]] and [[consultancy]] firms who had a vested interest in the success of PFI.<ref name=":0">{{Cite journal|last1=Shaoul|first1=Jean|last2=Stafford|first2=Anne|last3=Stapleton|first3=Pamela|date=2007|title=Partnerships and the role of financial advisors: private control over public policy?|journal=Policy & Politics|volume=35|issue=3|pages=479–495|language=en|doi=10.1332/030557307781571678}}</ref> The largest of the early PFI projects was Pathway, announced by [[Peter Lilley]] in 1995, which was to automate the handling of benefit payments at post offices.<ref name=":1">{{Cite web |last=Harrison |first=Michael |date=1999-05-10 |title=ICL stumbles on Pathway to hell |url=https://www.independent.co.uk/news/business/icl-stumbles-on-pathway-to-hell-1092947.html |access-date=2023-11-28 |website=The Independent |language=en}}</ref>

Two months after [[Tony Blair]]'s [[Labour Party (UK)|Labour Party]] took office, the [[Secretary of State for Health|Health Secretary]], [[Alan Milburn]], announced that "when there is a limited amount of public-sector capital available, as there is, it's PFI or bust".<ref name="gfme"/> PFI expanded considerably in 1996 and then expanded much further under Labour with the [[NHS (Private Finance) Act 1997]],<ref>{{cite web|url=http://wbi.worldbank.org/wbi/Data/wbi/wbicms/files/drupal-acquia/wbi/PPP%20Solution%20Notes%20-%20UK%20Treasury.pdf|title=The U.K. Treasury Infrastructure Finance Unit: Supporting PPP Financing During the Global Liquidity Crisis|publisher=World Bank|access-date=19 September 2015|archive-url=https://web.archive.org/web/20140308015853/http://wbi.worldbank.org/wbi/Data/wbi/wbicms/files/drupal-acquia/wbi/PPP%20Solution%20Notes%20-%20UK%20Treasury.pdf|archive-date=8 March 2014|url-status=dead}}</ref> resulting in criticism from many [[trade union]]s, elements of the Labour Party, the [[Scottish National Party]] (SNP), and the [[Green Party of England and Wales|Green Party]],<ref>{{cite web
 |title        = Green Party Policy on the Private Financing of Public Services
 |url          = http://policy.greenparty.org.uk/mfss/mfssec.html#PFI
 |access-date   = 23 March 2010
 |archive-url  = https://web.archive.org/web/20090519235841/http://policy.greenparty.org.uk/mfss/mfssec.html#PFI
 |archive-date = 19 May 2009
 |url-status     = dead}}</ref> as well as commentators such as [[George Monbiot]]. Proponents of the PFI include the [[World Bank]], the [[IMF]] and the [[Confederation of British Industry]].<ref>{{cite web|url=http://www.cbi.org.uk/ndbs/PositionDoc.nsf/1f08ec61711f29768025672a0055f7a8/da939678661811b380256e54003e39d0/$FILE/ppppfi0100.pdf|title=Position Document|publisher=CBI|access-date=8 May 2011|archive-url=https://web.archive.org/web/20101103203707/http://cbi.org.uk/ndbs/positiondoc.nsf/1f08ec61711f29768025672a0055f7a8/DA939678661811B380256E54003E39D0/$file/ppppfi0100.pdf|archive-date=3 November 2010|url-status=dead}}</ref>

Both Conservative and Labour governments sought to justify PFI on the practical<ref name="bwry">
{{Citation
  | last1 = Monbiot | first1 = George
  | title = The Biggest Weirdest Rip-Off Yet
  | newspaper = The Guardian
  | date =7 April 2009
  | url = https://www.theguardian.com/commentisfree/2009/apr/07/olympics-2012-m25-pfi
  | location=London}}
</ref> grounds that the private sector is better at delivering services than the public sector. This position has been supported by the UK National Audit Office with regard to certain projects. However, critics claim that many uses of PFI are ideological rather than practical; Dr. [[Allyson Pollock]] recalls a meeting with the then [[Chancellor of the Exchequer]] [[Gordon Brown]] who could not provide a rationale for PFI other than to "declare repeatedly that the public sector is bad at management, and that only the private sector is efficient and can manage services well."<ref name="Pollock 2005 3">{{Citation
  | last = Pollock
  | first = Allyson
  | title = NHS Plc: The Privatisation of Our Health Care
  | publisher = [[Verso]]
  | year = 2005
  | page = 3
  | isbn = 1-84467-539-4}}</ref>

[[File:PFI Office Central Manchester University Hospitals NHS Foundation Trust.jpg|thumb|Sign on the door of Central Manchester University Hospitals NHS Foundation Trust]]
To better promote PFI, the Labour government appointed [[Malcolm Bates (transport administrator)|Malcolm Bates]] to chair the efforts to review the policy with a number of [[Arthur Andersen]] staffers. They recommended the creation of a Treasury Task Force (TTF) to train public servants into PFI practice and to coordinate the implementation of PFI. In 1998, the TTF was renamed to "Partnership UK" (PUK) and sold 51% of its share to the private sector. PUK was then chaired by Sir [[Derek Higgs]], director of [[Prudential Insurance]] and chairman of [[British Land plc]]. These changes meant that the government transferred the responsibility of managing PFI to a corporation closely related with the owners, financiers, consultants, and subcontractors that stood to benefit from this policy. This created a strong appearance of conflict of interest.<ref name=":0" />

Trade unions such as [[Unison]] and [[GMB (trade union)|the GMB]], which are Labour supporters, strongly opposed these developments. At the 2002 [[Labour Party Conference]], the delegates adopted a resolution condemning PFI and calling for an independent review of the policy, which was ignored by the party leadership.<ref name=":0" />

=== Implementation ===
In education, the first PFI school opened in 2000.<ref name=kpmg>[[KPMG LLP]], ''Investment in school buildings and PFI - do they play a role in educational outcomes?'', 2008 version</ref>{{rp|1}} In 2005/2006 the Labour Government introduced [[Building Schools for the Future]], a scheme introduced for improving the infrastructure of Britain's schools. Of the £2.2 billion funding that the Labour government committed to BSF, £1.2 billion (55.5%) was to be covered by PFI credits.<ref name=num10-ukgov>{{Cite web|url=http://www.number10.gov.uk/output/Page5801.asp|archiveurl=https://web.archive.org/web/20070812122307/http://www.number10.gov.uk/output/Page5801.asp|url-status=dead|title=Building Schools for the Future - Government factsheet|archivedate=12 August 2007}}</ref> Some local authorities were persuaded to accept [[Academy (English school)|Academies]] in order to secure BSF funding in their area.<ref>{{cite web|url=http://www.antiacademies.org.uk/Home/opposing-the-academies-bill/protestonjuly19th|title=Opposing the Academies Bill|publisher=Anti-Academies Campaign|access-date=9 July 2010|archive-url=https://web.archive.org/web/20100711100152/http://www.antiacademies.org.uk/Home/opposing-the-academies-bill/protestonjuly19th|archive-date=11 July 2010|url-status=dead}}</ref>

In 2003 the Labour Government used [[public-private partnership]] (PPP) schemes for the privatisation of [[London Underground]]'s infrastructure and rolling stock. The two private companies created under the PPP, [[Metronet (British infrastructure company)|Metronet]] and [[Tube Lines]] were later taken into public ownership.<ref>{{Citation| last = Wright| first = Robert| title = Tube Lines shareholders are bought out by TfL| newspaper = The Financial Times| date = 8 May 2010| url = http://www.ft.com/cms/s/0/97bb4c24-5a38-11df-acdc-00144feab49a.html| access-date = 14 July 2010| archive-url = https://web.archive.org/web/20100526175610/http://www.ft.com/cms/s/0/97bb4c24-5a38-11df-acdc-00144feab49a.html| archive-date = 26 May 2010| url-status = dead}}</ref>

By October 2007 the total capital value of PFI contracts signed throughout the UK was £68bn,<ref name="prsp"/> committing the British taxpayer to future spending of £215bn<ref name="prsp">{{Citation | last=Timmins | first=Nicholas | title=Projects Seek Partners | newspaper=Financial Times | date=24 February 2009 | url=http://www.ft.com}}</ref> over the life of the contracts. The [[2008 financial crisis]] presented PFI with difficulties because many sources of private capital had dried up. Nevertheless, PFI remained the UK government's preferred method for public sector procurement under Labour. In January 2009 the Labour [[Secretary of State for Health]], [[Alan Johnson]], reaffirmed this commitment with regard to the health sector, stating that "PFIs have always been the NHS’s 'plan A' for building new hospitals … There was never a 'plan B'".<ref name="rotp">
{{cite web  | last = Omonira-Oyekanmi  | first = Rebecca  | title = Root of the Problem  | work = PPP Bulletin  | url=http://www.pppbulletin.com/features/view/791  | access-date = 2009-02-04 }}</ref> However, because of banks' unwillingness to lend money for PFI projects, the UK government now had to fund the so-called 'private' finance initiative itself. In March 2009 it was announced that the Treasury would lend £2bn of public money to private firms building schools and other projects under PFI.<ref name="gtpu">{{cite news | title =Government to 'prop up' PFI deals  | work =BBC | url=http://news.bbc.co.uk/1/hi/uk_politics/7920522.stm | access-date =2009-03-03 | date=2009-03-03}}</ref> Labour's [[Chief Secretary to the Treasury]], [[Yvette Cooper]], claimed the loans should ensure that projects worth £13bn – including waste treatment projects, environmental schemes and schools – would not be delayed or cancelled. She also promised that the loans would be temporary and would be repaid at a commercial rate. But, at the time, [[Vince Cable]] of the [[Liberal Democrats (UK)|Liberal Democrats]], subsequently [[Secretary of State for Business]] in the [[Coalition Government 2010–2015|coalition]], argued in favour of traditional public financing structures instead of propping up PFI with public money:

{{blockquote|The whole thing has become terribly opaque and dishonest and it's a way of hiding obligations. PFI has now largely broken down and we are in the ludicrous situation where the government is having to provide the funds for the private finance initiative.<ref name="gtpu"/>}}

In opposition at the time, even the [[Conservative Party (UK)|Conservative Party]] considered that, with the taxpayer now funding it directly, PFI had become "ridiculous". [[Philip Hammond]], subsequently [[Secretary of State for Transport]] in the coalition, said:

{{blockquote|If you take the private finance out of PFI, you haven’t got much left . . . if you transfer the financial risk back to the public sector, then that has to be reflected in the structure of the contracts. The public sector cannot simply step in and lend the money to itself, taking more risk so that the PFI structure can be maintained while leaving the private sector with the high returns these projects can bring. That seems to us fairly ridiculous.<ref name="prsp"/>}}

In an interview in November 2009, Conservative [[George Osborne]], subsequently [[Chancellor of the Exchequer]] in the coalition, sought to distance his party from the excesses of PFI by blaming Labour for its misuse.<ref>{{cite news
  | last = Petry
  | first = Andrew
  | title = PFIs: the good and the bad - but still on the table
  | newspaper = The Guardian
  | url=http://www.guardianpublic.co.uk/pfis-future-new-government-investment
  | access-date = 11 June 2010 }}</ref> At the time, Osborne proposed a modified PFI which would preserve the arrangement of private sector investment for public infrastructure projects in return for part-privatisation, but would ensure proper risk transfer to the private sector along with transparent accounting:
[[File:George Osborne 0437.jpg|thumb|upright|right|George Osborne]]
{{blockquote|The government's use of PFI has become totally discredited, so we need new ways to leverage private-sector investment . . . Labour's PFI model is flawed and must be replaced. We need a new system that doesn't pretend that risks have been transferred to the private sector when they can't be, and that genuinely transfers risks when they can be . . . On PFI, we are drawing up alternative models that are more transparent and better value for taxpayers. The first step is transparent accounting, to remove the perverse incentives that result in PFI simply being used to keep liabilities off the balance sheet. The government has been using the same approach as the banks did, with disastrous consequences. We need a more honest and flexible approach to building the hospitals and schools the country needs. For projects such as major transport infrastructure we are developing alternative models that shift risk on to the private sector. The current system – heads the contractor wins, tails the taxpayer loses – will end.<ref>{{Cite news
  | last = Hutton
  | first = Will
  | title = The Great Debate: Will Hutton vs. George Osborne
  | newspaper = The Observer
  | location = London
  | date = 15 November 2009
  | url = https://www.theguardian.com/politics/2009/nov/15/will-hutton-george-osborne-debate
  | access-date = <!-----10 March 2010----->}}</ref>}}

Despite being so critical of PFI while in opposition and promising reform, once in power George Osborne progressed 61 PFI schemes worth a total of £6.9bn in his first year as Chancellor.<ref name="Sparrow 2011">{{Cite news
  | last = Sparrow
  | first = Andrew
  | title = George Osborne backs 61 PFI projects despite earlier doubts over costing
  | newspaper = The Guardian
  | location = London
  | date = 18 April 2011
  | url = https://www.theguardian.com/politics/2011/apr/18/george-osborne-backs-pfi-projects
}}</ref> According to Mark Hellowell from the [[University of Edinburgh]]:

{{blockquote|The truth is the [[Coalition Government 2010–2015|coalition government]] have made a decision that they want to expand PFI at a time when the value for money credentials of the system have never been weaker. The government is very concerned to keep the headline rates of deficit and debt down, so it's looking to use an increasingly expensive form of borrowing through an intermediary knowing the investment costs won't immediately show up on their budgets.<ref name="Sparrow 2011"/>}}

The high cost of PFI deals is a major issue, with advocates for renegotiating PFI deals in the face of reduced public sector budgets,<ref name="Triggle 2010"/> or even for refusing to pay PFI charges on the grounds that they are a form of [[odious debt]].<ref>{{Citation
  | last = Monbiot
  | first = George
  | title = The bill for PFI contracts is an outrage. Let us refuse to pay this odious debt
  | newspaper = The Guardian
  | location = London
  | date = 22 November 2010
  | url = https://www.theguardian.com/commentisfree/2010/nov/22/pfi-private-finance-refuse-debt
  }}</ref> Critics such as Peter Dixon argue that PFI is fundamentally the wrong model for infrastructure investment, saying that public sector funding is the way forward.<ref name="PFI is a liability">{{Cite news
  | last = Dixon
  | first = Peter
  | title = We can't fool ourselves – PFI is a liability
  | newspaper = The Guardian
  | location = London
  | date = 13 November 2009
  | url = https://www.theguardian.com/commentisfree/2009/nov/13/pfi-hospitals
  | access-date = <!-----10 March 2010----->}}</ref>

In November 2010 the UK government released spending figures showing that the current total payment obligation for PFI contracts in the UK was £267 billion.<ref name="Datablog 2010">{{Citation
  | title = The Datablog Guide to PFI
  | newspaper = The Guardian
  | location = London
  | date = 19 November 2010
  | url = https://www.theguardian.com/politics/datablog/2010/nov/19/pfi-public-finance
  | first=Lisa
  | last=Evans
}}</ref> Research has also shown that in 2009 the Treasury failed to negotiate decent PFI deals with publicly owned banks, resulting in £1bn of unnecessary costs. This failure is particularly grave given the coalition's own admission in their national infrastructure plan that a 1% reduction in the cost of capital for infrastructure investment could save the taxpayer £5bn a year.<ref name="Treanor 2010"/>

The [[Department for Environment, Food and Rural Affairs]] (DEFRA) withdrew funding support from seven waste management PFI projects as a result of the [[2010 Spending Review]], directing the cuts to those projects where least progress had been made with contract procurement and obtaining [[Planning permission in the United Kingdom|planning permission]].<ref>Mann, N., [https://www.letsrecycle.com/news/defra-reveals-rationale-for-waste-pfi-funding-cuts/ Defra reveals rationale for waste PFI funding cuts], ''letsrecycle.com'', published 6 December 2010, accessed 20 January 2024</ref>

In February 2011 the Treasury announced a project to examine the £835m [[Queen's Hospital]] PFI deal. Once savings and efficiencies are identified, the hope - as yet unproven - is that the PFI consortium can be persuaded to modify its contract. The same process could potentially be applied across a range of PFI projects.<ref name="Timmins 2011">{{Citation
  | last = Timmins
  | first = Nicholas
  | title = Treasury struggles to win PFI rebates
  | newspaper = Financial Times
  | location = London
  | date = 16 February 2011
  | url = http://www.ft.com/cms/s/0/7e77b642-39be-11e0-8dba-00144feabdc0.html#axzz1KKQB4z7D
}}</ref>

===PF2===
In December, 2012 the Treasury published a [[White Paper]] outlining the results of a review of the PFI and proposals for change. These aimed to:
* centralise procurement by and for government departments, increase Treasury involvement in the procurement process, and move the management of all public sector investment in PFI schemes into a central unit in the Treasury;
* draw funding providers into projects at an earlier stage to reduce windfall gains when they were sold on;
* exclude "soft services" from PFI schemes where the specification was likely to change at short notice (such as catering and cleaning);
* reduce the role of bank debt in financing;
* improve transparency and accountability by both public and private sector participants;
* increase the proportion of risk carried by the public sector.<ref name=newappr>HM Treasury (2012), [https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/205112/pf2_infrastructure_new_approach_to_public_private_parnerships_051212.pdf ''A new approach to public private partnerships''], accessed 26 April 2024</ref>
Under this "new approach", the government would become a [[minority shareholder|minority equity co-investor]] in future projects, partly to better align the private and public sector interests in new projects.<ref name=newappr />{{rp|7}} A consultation exercise was subsequently undertaken by the government regarding the terms on which the public sector stake would be managed, aiming for a generally consistent approach across projects but with scope for details to be finalised prior to operation to reflect any project-specific issues.<ref>Local Government Lawyer, [https://www.j5.localgovernmentlawyer.co.uk/projects/projects-features/treasury-issues-model-for-public-sector-equity-participation-in-pf2-projects Projects and Regeneration: Treasury issues model for public sector equity participation in PF2 projects], published October 2013, accessed 26 April 2024</ref> The government's response to the consultation and the "Standard PF2 Equity Documents" were published in October 2013.<ref>HM Treasury, [https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/250122/PU1572_government_response_to_public_sector_equity_consultation.pdf Government response to: A new approach to public private partnerships consultation on the terms of public sector equity participation in PF2 projects], published October 2013, accessed 26 April 2024</ref>

Under the [[Priority School Building Programme]] which was launched in 2014 by the [[Education and Skills Funding Agency]], the rebuilding and/or refurbishment of 46 schools in England was funded and procured using the PF2 model.<ref>{{Cite web |date=6 December 2016 |title=Priority School Building Programme: overview |url=https://www.gov.uk/government/publications/psbp-overview/priority-school-building-programme-overview |access-date=2024-05-31 |website=GOV.UK |publisher=[[Education and Skills Funding Agency]] |language=en}}</ref>

===Scotland===
A specialist unit was set up within the [[Scottish Office]] in 2005 to handle PFI projects. In November 2014, [[Nicola Sturgeon]] announced a £409m public-private funding package which would be funded through a non-profit distributing model which would cap private sector returns, returning any surplus to the public sector.<ref>{{cite news|title=Nicola Sturgeon hails £400m hospital fund|url=https://www.bbc.co.uk/news/uk-scotland-scotland-politics-29865010|access-date=2 November 2014|work=BBC News|date=2 November 2014}}</ref> On Monday 11 April 2016, 17 PFI-funded schools in Edinburgh failed to open after the Easter break because of structural problems identified in two of them the previous Friday; the schools had been erected in the 1990s by Miller Construction.<ref>{{cite news |url=http://www.thenational.scot/news/edinburghs-17-closed-pfi-schools-may-have-to-be-rebuilt.16189 |title=Edinburgh's 17 Closed PFI Schools May Have To Be Rebuilt |first=Andrew |last=Learmonth |work=[[The National (Scotland)|The National]] |date=11 April 2016|access-date=12 April 2016}}</ref>

===Ending of PFI for new infrastructure projects===
A January 2018 report by the [[National Audit Office (United Kingdom)|National Audit Office]] found that the UK had incurred many billions of pounds in extra costs for no clear benefit through PFIs.<ref name=ft-20180118>{{cite news |url=https://www.ft.com/content/db1b5c66-fba7-11e7-9b32-d7d59aace167 |title=UK finance watchdog exposes lost PFI billions |last1=Mance |first1=Henry |last2=Parker |first2=George |newspaper=Financial Times |url-access=subscription |date=18 January 2018 |access-date=8 April 2024}}</ref><ref name=nao-20180112>{{cite web |url=https://www.nao.org.uk/wp-content/uploads/2018/01/PFI-and-PF2.pdf |title=PFI and PF2 |id=HC 718 |publisher=National Audit Office |date=12 January 2018 |access-date=8 April 2024}}</ref>

In October 2018, the Chancellor, [[Philip Hammond]], announced that the UK Government will no longer use PF2, the current model of Private Finance Initiative, for new infrastructure projects,<ref>{{cite web|url=https://www.gov.uk/government/publications/private-finance-initiative-pfi-and-private-finance-2-pf2-budget-2018-brief|title=Private Finance Initiative (PFI) and Private Finance 2 (PF2): Budget 2018 brief|date=29 October 2018|publisher=HM Treasury|access-date=29 October 2018}}</ref> due to value-for-money considerations and the difficulties caused by the collapse of PFI construction company [[Carillion]].<ref name=guardian-20181029>{{cite news |url=https://www.theguardian.com/uk-news/2018/oct/29/hammond-abolishes-pfi-contracts-for-new-infrastructure-projects |title=Hammond abolishes PFI contracts for new infrastructure projects |last=Davies |first=Rob |newspaper=The Guardian |date=29 October 2018 |access-date=8 April 2024}}</ref>

A Centre of Excellence was established within the [[Department of Health and Social Care]] to improve management of existing PFI contracts in the NHS.<ref>{{cite news |title=UK Chancellor announces end of the Private Finance Initiative ('PFI') |url=https://www.lexology.com/library/detail.aspx?g=85874bfd-d2e8-458f-a6c5-1a249c31e09c |access-date=2 December 2018 |publisher=Lexology |date=5 November 2018}}</ref>

==Examples of projects==
There have been over 50 English hospitals procured under a PFI contract with capital cost exceeding £50 million:

{| class="wikitable"
|+Major English hospitals (with capital cost exceeding £50 million)
! Financial<br>close  !! Project name  !! Capital<br>cost !! Authority !! References
|-
| rowspan="2" |1997
|[[Darent Valley Hospital]], [[Dartford]]
|£94m
|[[Dartford and Gravesham NHS Trust]]
|<ref>{{cite book|url=https://books.google.com/books?id=IHQgAQAAIAAJ|title=The PFI contract for the new Dartford and Gravesham Hospital|year=1999|publisher=National Audit Office|isbn=9780102661996|access-date=2 April 2018}}</ref>
|-
|[[Cumberland Infirmary]], [[Carlisle, Cumbria|Carlisle]]
|£65m
|[[North Cumbria University Hospitals NHS Trust]]
|<ref>{{cite web|url=http://www.visitcumbria.com/hospitals.htm|title=Cumberland Infirmary, Carlisle|publisher=Visit Cumbria|access-date=2010-06-02}}</ref>
|-
| rowspan="6" |1998
|[[Norfolk and Norwich University Hospital]]
|£229m
|[[Norfolk and Norwich University Hospitals NHS Foundation Trust]]
|<ref>{{cite web|url=http://www.nnuh.nhs.uk/docs%5Ctrustdocs%5C96.pdf|archive-url=https://wayback.archive-it.org/all/20081003104713/http://nnuh.nhs.uk/docs/trustdocs/96.pdf|url-status=dead|archive-date=3 October 2008|title=Private Finance Initiative – Norfolk and Norwich University Hospital}}</ref>
|-
|[[Calderdale Royal Hospital]], [[Halifax, West Yorkshire|Halifax]]
|£103m
|[[Calderdale and Huddersfield NHS Foundation Trust]]
|<ref>{{cite news|title=Shock cost of hospital|url=http://www.halifaxcourier.co.uk/news/calderdale/shock-cost-of-hospital-1-1990069|access-date=26 December 2014|publisher=Halifax Courier|date=2 August 2001}}</ref>
|-
|[[Wythenshawe Hospital]], [[Manchester]]
|£113m
|[[Manchester University NHS Foundation Trust]]
|<ref>{{cite web|url=https://www.newcivilengineer.com/113m-wythenshawe-hospital-development/849463.article|title=£113M Wythenshawe Hospital development|date=20 August 1998|publisher=New Civil Engineer|access-date=7 April 2018}}</ref>
|-
|[[University Hospital of North Durham]]
|£87m
|[[County Durham and Darlington NHS Foundation Trust]]
|<ref>{{cite news|title=Crisis-hit hospital finds that private finance for NHS comes at a price|url=https://www.theguardian.com/society/2001/jul/23/hospitals.ppp|date=23 July 2001|newspaper=The Guardian|access-date=2 April 2018}}</ref>
|-
|[[Queen Elizabeth Hospital, London|Queen Elizabeth Hospital]], [[Woolwich]]
|£84m
|[[Lewisham and Greenwich NHS Trust]]
|<ref>{{cite web|url=http://www.ontariohealthcoalition.ca/wp-content/uploads/PART-1-January-July-1999.pdf|title=NHS capital expenditure and the private finance initiative—expansion or contraction?|page=49|publisher=British Medical Journal|date=3 July 1999|access-date=1 April 2018}}</ref>
|-
|[[Princess Royal University Hospital]], [[Farnborough, London|Farnborough]]
|£118m
|[[King's College Hospital|King's College Hospital NHS Foundation Trust]]
|<ref name="phhs">{{Citation| last = Timmins| first = Nicholas | title = PFI Hospitals Hit Services, Says Study| newspaper = Financial Times| date = 11 September 2007| url = http://www.ft.com}}</ref>
|-
| rowspan="5" |1999
|[[Barnet Hospital]]
|£54m
|[[Royal Free London NHS Foundation Trust]]
|<ref>{{cite web|url=https://www.hospitalmanagement.net/projects/barnet/|title=Barnet General Hospital|publisher=Hospital Management|access-date=7 April 2018}}</ref>
|-
|[[Worcestershire Royal Hospital]], [[Worcester, England|Worcester]]
|£85m
|[[Worcestershire Acute Hospitals NHS Trust]]
|<ref>{{cite web|url=https://www.constructionnews.co.uk/home/worcester-bovis-takes-pfi-hospital/915341.article|title=Worcester Bovis takes PFI hospital|date=1 April 1999|publisher=Construction News|access-date=1 April 2018}}</ref>
|-
|[[Hereford County Hospital]]
|£62m
|[[Wye Valley NHS Trust]]
|<ref>{{cite web|url=https://www.building.co.uk/news/hereford-pfi-deal-closed/7379.article|title=Hereford PFI deal closed|date=23 April 1999|publisher=Building|access-date=1 April 2018}}</ref>
|-
|[[James Cook University Hospital]], [[Middlesbrough]]
|£96m
|[[South Tees Hospitals NHS Foundation Trust]]
|<ref>{{cite web|url=https://www.thefreelibrary.com/Moving+three+hospitals+is+a+truly+major+operation.-a0111045545|title=Moving three hospitals is a truly major operation|date=9 December 2003|publisher=The Journal|access-date=31 March 2018}}</ref>
|-
|[[Great Western Hospital]], [[Swindon]]
|£148m
|[[Great Western Hospitals NHS Foundation Trust]]
|<ref>{{cite web|url=https://www.constructionnews.co.uk/january-1998/33624.issue?cmd=GoToPage&val=33|title=Tarmac Start in site for hospital|publisher=Construction News|date=8 January 1998|access-date=8 April 2018}}</ref>
|-
| rowspan="2" |2000
|[[King's College Hospital|Golden Jubilee Wing, King's College Hospital]], London
|£50m
|[[King's College Hospital|King's College Hospital NHS Foundation Trust]]
|<ref>{{cite web|url=https://www.i-fm.net/members/news/july00/13_02.html|title=Building work starts on London hospital|date=13 July 2000|publisher=IFM.net|access-date=22 April 2018|archive-date=22 April 2018|archive-url=https://web.archive.org/web/20180422202717/https://www.i-fm.net/members/news/july00/13_02.html|url-status=dead}}</ref>
|-
|[[University College Hospital]], London
|£422m
|[[University College London Hospitals NHS Foundation Trust]]
|<ref>{{cite web|url=http://www.uclh.nhs.uk/News/2002/May|title=University College London Hospitals wins award for Best Health Project (over £20 million)|access-date=10 September 2010|publisher=University College London Hospitals NHS Foundation Trust|archive-url=https://web.archive.org/web/20070124033221/http://www.uclh.nhs.uk/News/2002/May/|archive-date=24 January 2007|url-status=dead}}</ref>
|-
| rowspan="2" |2001
|[[Russells Hall Hospital]], [[Dudley]]
|£137m
|[[Dudley Group NHS Foundation Trust]]
|<ref>{{cite web|url=https://www.constructionnews.co.uk/home/sir-robert-chases-health-job-losses/381986.article|title=Sir Robert chases health job losses|date=20 April 2006|publisher=Construction News|access-date=15 April 2018}}</ref>
|-
|[[West Middlesex University Hospital]], [[Isleworth]]
|£55m
|[[Chelsea and Westminster Hospital NHS Foundation Trust]]
|<ref>{{cite web|url=https://www.nao.org.uk/wp-content/uploads/2002/11/020349.pdf|title=The PFI contract for the redevelopment of the West Middlesex University Hospital|publisher=National Audit Office|access-date=2 July 2018}}</ref>
|-
|2002
|[[University Hospital Coventry]]
|£440m
|[[University Hospitals Coventry and Warwickshire NHS Trust]]
|<ref name="phpc">{{Citation| title = PFI Hospitals 'Hit Patient Care'| newspaper = BBC| date = 12 June 2007| url = http://news.bbc.co.uk/1/hi/programmes/file_on_4/6740895.stm}}</ref>
|-
| rowspan="4" |2003
|[[Central Middlesex Hospital]], [[Park Royal]]
|£60m
|[[London North West Healthcare NHS Trust]]
|<ref>{{cite web|url=http://www.ukihma.co.uk/projects/brent-emergency-care-diagnostic-centre/|title=Brent Emergency Care & Diagnostic Centre, London, UK|date=31 October 2007|publisher=UKIHMA|access-date=29 April 2018}}</ref>
|-
|[[Royal Derby Hospital]]
|£333m
|[[Derby Teaching Hospitals NHS Foundation Trust]]
|<ref>{{cite web|url=http://news.bbc.co.uk/1/hi/england/derbyshire/3079268.stm|title=Huge PFI hospital for Derby|date=3 September 2003|publisher=BBC|access-date=14 April 2018}}</ref>
|-
|[[John Radcliffe Hospital|West Wing, John Radcliffe Hospital]], [[Oxford]]
|£134m
|[[Oxford University Hospitals NHS Foundation Trust]]
|<ref>{{cite web|url=http://www.growthbusiness.co.uk/right-prescription-for-oxford-john-radcliffe-637251/|title=Right prescription for Oxford John Radcliffe|date=22 August 2008|publisher=Growth Business|access-date=20 January 2018}}</ref>
|-
|[[Royal Blackburn Teaching Hospital]]
|£133m
|[[East Lancashire Hospitals NHS Trust]]
|<ref>{{cite news|url=http://www.lancashiretelegraph.co.uk/business/9363150.Balfour_Beatty_sells_its_stake_in_Royal_Blackburn_Hospital/|title=Balfour Beatty sells its stake in Royal Blackburn Hospital|date=14 November 2011|newspaper=Lancashire Telegraph|access-date=15 April 2018}}</ref>
|-
| rowspan="6" |2004
|[[Royal Manchester Children's Hospital]]
|£500m
|[[Central Manchester University Hospitals NHS Foundation Trust]]
|<ref>{{Cite news |title=Central Manchester Hospitals |url=http://www.anshen.com/index2.htm |work=[[Anshen & Allen]] |access-date=11 March 2012 |url-status=dead |archive-url=https://web.archive.org/web/20120215013312/http://www.anshen.com/index2.htm |archive-date=15 February 2012}}</ref>
|-
|[[Addenbrooke's Hospital|Elective Care Facility, Addenbrooke's Hospital]]
|£85m
|[[Cambridge University Hospitals NHS Foundation Trust]]
|<ref>{{cite web|url= https://www.cam.ac.uk/news/clinical-and-research-centre-reaches-milestone |title= Clinical and research centre reaches milestone|date=7 November 2005|publisher=University of Cambridge|access-date=8 February 2018}}</ref>
|-
|[[St James's University Hospital|St James's Institute of Oncology]], [[Leeds]]
|£265m
|[[Leeds Teaching Hospitals NHS Trust]]
|<ref>{{cite web|url=https://www.lawgazette.co.uk/news/firms-usher-in-new-pfi-era-with-credit-guarantee-scheme/42851.article|title=Firms usher in new PFI era with credit guarantee scheme|work=Law Society Gazette|date=29 October 2004|access-date=22 April 2018}}</ref>
|-
|[[Queen Mary's Hospital, Roehampton]]
|£55m
|[[St George's University Hospitals NHS Foundation Trust]]
|<ref>{{cite web|url=http://www.richmondandtwickenhamtimes.co.uk/news/491961.New_Queen_Mary_s_Hospital_on_the_way/|title=New Queen Mary's Hospital on the way|date=21 May 2004|work=Richmond and Twickenham Times|access-date=5 May 2018}}</ref>
|-
|[[University Hospital Lewisham|Riverside Building, University Hospital Lewisham]]
|£58m
|[[Lewisham and Greenwich NHS Trust]]
|<ref>{{cite web|url=http://home.nestor.minsk.by/build/news/2006/12/1307.html|title=Carillion completes £60m Lewisham Hospital extension|date=1 December 2006|publisher=Nestor|access-date=3 March 2018}}</ref>
|-
|[[Queen's Hospital]], [[Romford]]
|£312m
|[[Barking, Havering and Redbridge University Hospitals NHS Trust]]
|<ref name="Timmins 2011"/>
|-
| rowspan="6" |2005
|[[King's Mill Hospital]], [[Ashfield, Nottinghamshire|Ashfield]]
|£300m
|[[Sherwood Forest Hospitals NHS Foundation Trust]]
|<ref>{{cite web|url= http://www.modbs.co.uk/news/archivestory.php/aid/1552/Skanska_wins_PFI_hospital_scheme_in_Nottinghamshire.html|title= Skanska wins PFI hospital scheme in Nottinghamshire|date=18 December 2005|publisher=Modern Building Services|access-date=2 May 2018}}</ref>
|-
|[[Castle Hill Hospital|Queen's Centre for Oncology and Haematology]], [[Cottingham, East Riding of Yorkshire|Cottingham]]
|£65m
|[[North West Anglia NHS Foundation Trust]]
|<ref>{{cite web|url=http://www.yorkpress.co.uk/news/7870086.Shepherd_Construction_gets_preferential_treatment/?ref=arc|title=Shepherd Construction gets preferential treatment|work=York Press|date=31 January 2005|access-date=21 April 2018}}</ref>
|-
|[[Freeman Hospital|Northern Centre for Cancer Treatment]], [[Newcastle upon Tyne]]
|£150m
| rowspan="2" |[[Newcastle upon Tyne Hospitals NHS Foundation Trust]]
|<ref name=bbc2005>{{cite web|url=http://news.bbc.co.uk/1/hi/england/tyne/4492603.stm|title=City gets £300m hospitals revamp (the cost was £300 million in total across two hospitals)|date=28 April 2005|publisher=BBC|access-date=7 May 2018}}</ref>
|-
|[[Royal Victoria Infirmary|Great North Children's Hospital]], [[Newcastle upon Tyne]]
|£150m
|<ref name=bbc2005/>
|-
|[[Churchill Hospital]], [[Oxford]]
|£236m
|[[Oxford University Hospitals NHS Foundation Trust]]
|<ref>{{cite web|url=https://www.building.co.uk/news/alfred-mcalpine-jv-wins-125m-hospital-contract/3060523.article|title= Alfred McAlpine JV wins £125m hospital contract|date=19 December 2005|publisher=Building|access-date=30 April 2018}}</ref>
|-
|[[Queen Alexandra Hospital]], [[Portsmouth]]
|£236m
|[[Portsmouth Hospitals NHS Trust]]
|<ref>{{cite web|url=https://www.theyworkforyou.com/wrans/?id=2006-06-14b.72540.h |publisher=House of Commons|title= Written answers|date= 20 June 2006|access-date=5 May 2018}}</ref>
|-
| rowspan="4" |2006
|[[Whiston Hospital]], [[Merseyside]]
|£338m
|[[St Helens and Knowsley Teaching Hospitals NHS Trust]]
|<ref>{{citation|url=http://www.sthk.nhs.uk/about/whiston-hospital|title=Whiston Hospital |publisher= St Helens and Knowsley Teaching Hospitals NHS Trust |access-date=3 May 2018}}</ref>
|-
|[[Queen Elizabeth Hospital Birmingham]]
|£545m
|[[University Hospitals Birmingham NHS Foundation Trust]]
|<ref>[https://www.bbc.co.uk/news/10317818 First patients at Birmingham's Queen Elizabeth Hospital] BBC, 16 June 2010</ref>
|-
|[[St Bartholomew's Hospital]], London
|£500m
| rowspan="2" |[[Barts Health NHS Trust]]
|<ref>{{cite web|url=https://www.theconstructionindex.co.uk/news/view/skanska-sells-london-hospital-stakes|title=Skanska sells London hospital stakes|publisher=The Construction Index|date=7 December 2015|access-date=13 April 2018}}</ref>
|-
|[[Royal London Hospital]]
|£650m
|<ref>{{cite news| url=https://www.bbc.co.uk/news/uk-england-london-17214333 | work=BBC News | title=New £650m Royal London Hospital opens in Whitechapel | date=1 March 2012}}</ref>
|-
| rowspan="10" |2007
|[[Peterborough City Hospital]], [[Cambridgeshire]]
|£336m
|[[North West Anglia NHS Foundation Trust]]
|<ref>{{cite web|url= https://www.building.co.uk/multiplex-preferred-bidder-at-peterborough-hospital-pfi/3048177.article |title= Multiplex preferred bidder at Peterborough hospital PFI|date=11 March 2005|publisher=Building|access-date=30 April 2018}}</ref>
|-
|[[North Middlesex University Hospital]], [[Edmonton, London|Edmonton]]
|£118m
|[[North Middlesex University Hospital|North Middlesex University Hospital NHS Trus]]
|<ref>{{cite web|url=https://www.constructionnews.co.uk/home/north-london-pfi-hospital-gets-financial-close/211748.article|title=North London PFI hospital gets financial close|date=31 October 2007|publisher=Construction News|access-date=29 April 2018}}</ref>
|-
|[[Broomfield Hospital]], [[Chelmsford]]
|£180m
|[[Mid Essex Hospital Services NHS Trust]]
|<ref>{{cite web|url=http://www.operis.com/news/broomfield-hospital-pfi-project-closes/|title=Broomfield Hospital PFI Project Closes|publisher=Operis|date=17 December 2007|access-date=27 April 2018}}</ref>
|-
|[[Royal Stoke University Hospital]]
|£370m
|[[University Hospitals of North Midlands NHS Trust]]
|<ref>{{cite web|url=http://moderngov.staffordshire.gov.uk/documents/s88720/UHNM%20Self%20Assessment%20Report.pdf|title=Self Assessment Report|publisher=Staffordshire Council|access-date=4 May 2018}}</ref>
|-
|[[Walsall Manor Hospital]], [[West Midlands (county)|West Midlands]]
|£174m
|[[Walsall Healthcare NHS Trust]]
|<ref>{{cite news|url=https://www.birminghammail.co.uk/news/local-news/walsalls-new-174million-hospital-is-leading-118068|title=Walsall's new £174million hospital is leading the green revolution|newspaper=Birmingham Mail|date=24 October 2012|access-date=5 May 2018}}</ref>
|-
|[[Roseberry Park Hospital]], [[Middlesbrough]]
|£75m
|[[Tees, Esk and Wear Valleys NHS Foundation Trust]]
|<ref>{{cite web|url=http://www.thenorthernecho.co.uk/news/16167906.Builders_face_questions_over_numerous_defects_at___75m_hospital/|title=Builders face questions over numerous defects at £75m Middlesbrough hospital|date=19 April 2018|publisher=Northern Echo|access-date=4 May 2018}}</ref>
|-
|[[Tameside General Hospital]]
|£78m
|[[Tameside and Glossop Integrated Care NHS Foundation Trust]]
|<ref>{{cite web|url= https://www.hicl.com/tameside-general-hospital-uk#|title=Tameside General Hospital|publisher=HICL|access-date=3 May 2018}}</ref> 
|-
|[[Pinderfields Hospital]], [[Wakefield]]
|£150m
| rowspan="2" |[[Mid Yorkshire Hospitals NHS Trust]]
|<ref name=midyorks>{{cite web|url=https://www.hicl.com/pinderfields-pontefract-hospitals-uk|title=Pinderfields & Pontefract Hospitals (the cost was £311 million in total across two hospitals)|publisher=HICL|access-date=5 May 2018}}</ref>
|-
|[[Pontefract Hospital]]
|£150m
|<ref name=midyorks/>
|-
|[[Salford Royal Hospital]]
|£136m
|[[Salford Royal NHS Foundation Trust]]
|<ref>{{cite web|url= https://www.insidermedia.com/insider/northwest/93330-|title= Balfour Beatty sells Salford PFI stake for £22m|publisher=Insider Media|date=1 July 2013|access-date=30 April 2018}}</ref>
|-
|2008
|[[Tunbridge Wells Hospital]]
|£230m
|[[Maidstone and Tunbridge Wells NHS Trust]]
|<ref>{{cite web|url=http://news.bbc.co.uk/1/hi/england/kent/6194705.stm|title='Milestone move' for PFI hospital|publisher=BBC|date=19 December 2006|access-date=13 April 2018}}</ref>
|-
|2010
|[[Southmead Hospital]], [[Bristol]]
|£430m
|[[North Bristol NHS Trust]]
|<ref>{{cite web |title=Bristol's 'super' hospital open for business |url=https://www.itv.com/news/westcountry/story/2012-08-22/a-super-hospital-in-the-making-two-years-since-the-start-of-southmead/ |website=ITV News |access-date=25 January 2019 |date=22 August 2012}}</ref>
|-
| rowspan="2" |2013
|[[Alder Hey Children's Hospital]], [[Liverpool]]
|£187m
|[[Alder Hey Children's Hospital|Alder Hey Children's NHS Foundation Trust]]
|<ref>{{cite news|url=https://www.constructionnews.co.uk/projects/project-reports/the-pacemaker-inside-laing-orourkes-fastest-ever-hospital/8673808.article|title=The Pacemaker: Inside Laing O'Rourke's fastest ever hospital|date=11 December 2014|publisher=Construction News|access-date=26 April 2018}}</ref>
|-
|[[Royal Liverpool University Hospital]]
|£429m
|[[Royal Liverpool and Broadgreen University Hospitals NHS Trust]]
|<ref>{{cite news|url=https://www.bbc.co.uk/news/uk-england-merseyside-24128952|title=New £429m Royal Liverpool University Hospital given the green light – BBC News|work=BBC News|date=17 September 2013|access-date=19 September 2016}}</ref>
|-
|2015
|[[Royal Papworth Hospital]], [[Cambridgeshire]]
|£165m
|[[Royal Papworth Hospital|Royal Papworth Hospital NHS Foundation Trust]]
|<ref>{{cite web|url= http://www.constructionmanagermagazine.com/news/skanskas-royal-papworth-hospital-delayed-over-clad/|title= Skanska's Royal Papworth Hospital delayed over cladding fears|date=2 July 2018|publisher=Construction Manager Magazine|access-date=3 July 2018}}</ref>
|-
|2016
|[[Midland Metropolitan University Hospital]], [[Smethwick]]
|£297m
|[[Sandwell and West Birmingham Hospitals NHS Trust]]
|<ref>{{cite news|title=Smethwick super hospital on way at last as Chancellor George Osborne agrees to £353m scheme|url=https://www.expressandstar.com/news/health/2014/07/14/chancellor-george-osborne-backs-353m-super-hospital-for-black-country/|access-date=15 July 2014|newspaper=Express and Star|date=15 July 2014}}</ref>
|}

There have been some six Scottish hospitals procured under a PFI contract with capital cost exceeding £50 million:
{| class="wikitable"
|+Major Scottish hospitals (with capital cost exceeding £50 million)
! Financial<br>close  !! Project name  !! Capital<br>cost !! Authority !! References
|-
| rowspan="3" |1998
|[[Royal Infirmary of Edinburgh]]
|£180m
|[[NHS Lothian]]
|<ref>{{cite web|url=http://www.edinburgharchitecture.co.uk/new_royal_infirmary.htm|title=New Royal Infirmary, Edinburgh, Keppie Architects, Edinburgh Royal Infirmary|work=Edinburgh Architecture|date=27 September 2010 |access-date=1 August 2015}}</ref>
|-
|[[University Hospital Wishaw]], [[North Lanarkshire]]
|£100m
| rowspan="2" |[[NHS Lanarkshire]]
|<ref>{{cite news|url=https://www.dailyrecord.co.uk/news/local-news/wishaw-general-set-cost-taxpayers-7895927|title=Wishaw General set to cost taxpayers £813 million after controversial PFI contract|date=5 May 2016|newspaper=Daily Record|access-date=6 May 2018}}</ref>
|-
|[[University Hospital Hairmyres]], [[South Lanarkshire]]
|£68m
|<ref>{{cite web |url=http://www.scotland.gov.uk/Resource/Doc/1069/0005223.pdf |title=PFI data sheet: Hairmyres Hospital, Lanarkshire Acute Hospitals Trust |publisher=Scottish Government |access-date=11 August 2014 }}</ref>
|-
|2006
|[[Stobhill Hospital]], [[Glasgow]]
|£100m
|[[NHS Greater Glasgow and Clyde]]
|<ref>{{cite web|url=https://www.ajbuildingslibrary.co.uk/projects/display/id/841|title=New Stobhill Hospital Ambulatory Care and Diagnostic Centre|publisher=Architects Journal|access-date=6 May 2018}}</ref>
|-
|2007
|[[Forth Valley Royal Hospital]], [[Falkirk (council area)|Falkirk]]
|£300m
|[[NHS Forth Valley]]
|<ref>{{cite web|url=http://www.laingorourke.com/media/News/2009/Pages/FirstMinisterofScotlandtopsoutnewForthValleyHospital.aspx |title=First Minister of Scotland tops out new Forth Valley Hospital |publisher=laingorourke. |access-date=22 July 2011 |url-status=dead |archive-url=https://web.archive.org/web/20110929111545/http://www.laingorourke.com/media/News/2009/Pages/FirstMinisterofScotlandtopsoutnewForthValleyHospital.aspx |archive-date=29 September 2011 }}</ref>
|-
|2009
|[[Victoria Hospital, Kirkcaldy|Victoria Hospital]], [[Kirkcaldy]]
|£170m
|[[NHS Fife]]
|<ref>{{cite web|url=http://www.urbanrealm.com/news/3698/BDP_complete_%C2%A3170m_Victoria_Hospital_extension.html|title=BDP complete £170m Victoria Hospital extension|date=24 August 2012|publisher=Urban Realm|access-date=6 May 2018}}</ref>
|}

The following is a selection of major projects in other sectors procured under a PFI contract:
{| class="wikitable"
|+Some major projects in other sectors
! Financial<br>close  !! Project name  !! Capital<br>cost !! Authority !! Sector  !! References
|-
|1996
|[[Horizon IT scandal|Pathway]] (benefit payments at post offices)
|£1.5b
|[[Department of Social Security (United Kingdom)|Department of Social Security]]
|Central Government
|<ref name=":1" />
|-
|1998
|[[National Physical Laboratory (United Kingdom)|National Physical Laboratory]], [[Teddington]]
|£96m
|[[Department of Trade and Industry (United Kingdom)|Department of Trade & Industry]]
|Central Government
|<ref name="tcnp">{{Citation| title = The Termination of the PFI Contract for the National Physical Laboratory| year = 2006| publisher = [[National Audit Office (United Kingdom)|National Audit Office]]| url = http://www.official-documents.co.uk/document/hc0506/hc10/1044/1044.pdf| archive-url = https://wayback.archive-it.org/all/20071129091206/http://www.official-documents.co.uk/document/hc0506/hc10/1044/1044.pdf| url-status = dead| archive-date = 2007-11-29}}</ref>
|-
|2000
|[[The Doughnut|GCHQ New Accommodation]], [[Cheltenham]]
|£330m
|[[Government Communications Headquarters]]
|Intelligence
|<ref name=Guard03>{{cite news|url=https://www.theguardian.com/uk/2003/jun/10/terrorism.Whitehall|title=The Doughnut, the less secretive weapon in the fight against international terrorism|author= Richard Norton-Taylor|date=10 June 2003|work=The Guardian|access-date=15 December 2013}}</ref>
|-
|2000
|[[Ministry of Defence Main Building (United Kingdom)#Redevelopment|Ministry of Defence Main Building]], London
|£531m
|[[Ministry of Defence (United Kingdom)|Ministry of Defence]]
| rowspan="3" |Central Government
|<ref>{{cite web|url=https://www.innisfree.co.uk/portfolio/defence-accommodation/|publisher=Innisfree|title=Defence Accommodation|access-date=7 May 2018}}</ref>
|-
|2000
|[[Government Offices Great George Street|HM Treasury Building]], London
|£140m
|[[HM Treasury]]
|<ref>{{cite web|url=http://www.lendlease.com/emea/united-kingdom/sectors/commercial-office |title=Lend Lease - Commercial Office |access-date=2014-05-19 |url-status=dead |archive-url=https://web.archive.org/web/20140519131710/http://www.lendlease.com/emea/united-kingdom/sectors/commercial-office |archive-date=19 May 2014}}</ref>
|-
|2001
|[[Inland Revenue#STEPS contract|The STEPS Contract]]
|£370m
|[[Inland Revenue]]
|<ref name="ccop">{{Citation| last = Press Association| title = Customs Criticised Over Offshore Property Deal| newspaper = The Guardian| date = 14 June 2005| url = https://www.theguardian.com/politics/2005/jun/14/immigrationpolicy| location=London}}</ref><ref>{{Citation| title = PFI: The STEPS Deal| year = 2004| publisher = [[National Audit Office (United Kingdom)|National Audit Office]]| url = http://www.nao.org.uk/publications/0304/pfi_-_the_steps_deal.aspx}}</ref>
|-
|2003
|[[Skynet (satellite)#Skynet 5|Skynet 5]]
|£1.4bn
|[[Ministry of Defence (United Kingdom)|Ministry of Defence]]
| rowspan="5" |Defence
|<ref>{{cite web|url=http://www.pfie.com/skynet-5-takes-pfi-into-space/21073490.fullarticle|title=Skynet 5 takes PFI into space|date=12 March 2013|publisher=Project Finance International|access-date=7 May 2018}}</ref>
|-
|2004
|[[Colchester Garrison#Post-war|Colchester Garrison]]
|£540m
| rowspan="3" |[[British Army]]
|<ref>[http://www.visitcolchester.com/regeneration-areas.asp#SOUTH "Colchester Regeneration Plans"] {{Webarchive|url=https://web.archive.org/web/20110717215528/http://www.visitcolchester.com/regeneration-areas.asp#SOUTH |date=17 July 2011 }}, accessed 23 December 2010.</ref><ref>{{Cite web |url=http://www.partnershipsuk.org.uk/PUK-Projects-Database-Map.aspx?Region=East%20of%20England |title=List of PFIs in the East of England |access-date=23 December 2010 |archive-url=https://web.archive.org/web/20111009175509/http://www.partnershipsuk.org.uk/PUK-Projects-Database-Map.aspx?Region=East%20of%20England |archive-date=9 October 2011 |url-status=dead}}</ref>
|-
|2006
|[[Northwood Headquarters]]
|£150m
|<ref>{{cite web |url=http://www.building.co.uk/news/carillion-awarded-military-assignment/3071439.article |title=Carillion awarded military assignment |author=Stocks, Caroline |date=31 July 2006 |publisher=Building |access-date=11 April 2011}}</ref>
|-
|2006
|[[Project Allenby Connaught]] (various garrisons)
|£1.6bn
|<ref>{{cite web|title=Defence Infrastructure Organisation: Project Allenby Connaught|url=https://www.gov.uk/guidance/defence-infrastructure-organisation-service-family-accommodation-allenby-connaught|publisher=Ministry of Defence|access-date=3 March 2018|date=12 December 2012}}</ref>
|-
|2008
|[[Future Strategic Tanker Aircraft]]
|£2.7bn
|[[Royal Air Force]]
|<ref name='Norton-Taylor 2010'/>
|-
|2012
|[[Sheffield City Council#Council as service provider and employer|Streets Ahead]], [[Sheffield]]
|£369m
|[[Sheffield City Council]]
|Local Government – Highway Maintenance
|<ref>{{cite news|url=http://www.yorkshirepost.co.uk/news/sheffield-council-unaware-of-company-s-corporate-manslaughter-conviction-before-signing-two-billion-pound-contract-1-8672944|title='Sheffield Council 'unaware' of company's corporate manslaughter conviction before signing two BILLION pound contract'|newspaper=Yorkshire Post|date=27 July 2017|access-date=28 October 2017}}</ref>
|}

''The Guardian'' published a full list of PFI contracts by department in July 2012,<ref>{{cite news|title=PFI contracts: the full list|url=https://www.theguardian.com/news/datablog/2012/jul/05/pfi-contracts-list?|access-date=9 November 2013|newspaper=The Guardian|date=5 July 2012}}</ref> and HM Treasury published a full list of PFI contracts by department in March 2015.<ref>{{cite web|url=https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/503954/current_projects_as_at_31_March_2015.xlsx|title=Current Projects as at 31 March 2015|publisher=HM Treasury|access-date=5 May 2018}}</ref>

==Impact==

===Analysis===
A study by [[HM Treasury]] in July 2003 was supportive, showing that the only deals in its sample which were over budget were those where the public sector changed its mind after deciding what it wanted and from whom it wanted it.<ref>{{Citation| title = PFI - Meeting The Challenge| publisher = [[HM Treasury]]| url = http://www.hm-treasury.gov.uk/}}</ref>

A later report by the [[National Audit Office (United Kingdom)|National Audit Office]] in 2009 found that 69 per cent of PFI construction projects between 2003 and 2008 were delivered on time and 65 per cent were delivered at the contracted price.<ref>{{cite web|url=http://www.nao.org.uk/publications/0809/private_finance_projects.aspx|title=Private Finance Projects|publisher=National Audit Office|access-date=30 September 2012}}</ref>

However, a report by the National Audit Office in 2011 was much more critical, finding that the use of PFI "has the effect of increasing the cost of finance for public investments relative to what would be available to the government if it borrowed on its own account" and "the price of finance is significantly higher with a PFI."<ref>{{cite web|url=https://publications.parliament.uk/pa/cm201012/cmselect/cmtreasy/1146/114608.htm|title=Conclusions and recommendations|publisher=House of Commons|year=2011|access-date=30 September 2012}}</ref>

An article in ''[[The Economist]]'' reports that:

{{blockquote|Getting the private sector to build and run prisons has brought tangible benefits. One is speed: private jails are built in as little as two years, rather than the seven that they used to take when the government did the building. Running costs are lower too, mainly because staff are paid a quarter less than in the public sector (though senior managers are paid more) and get fewer benefits.<ref>{{cite news|url=http://www.economist.com/node/13962456?story_id=E1_TPJGNQVG|access-date=2011-05-09|title=Private prisons: Criminal enterprises | newspaper = The Economist|date=2009-07-02}}</ref>}}

On the other hand, Monbiot argues that the specifications of many public infrastructure projects have been distorted to increase their profitability for PFI contractors.<ref name="bwry"/>

PFI projects allowed the [[Ministry of Defence (United Kingdom)|Ministry of Defence]] to gain many useful resources "''on a shoestring''"; PFI deals were signed for barracks, headquarters buildings, training for pilots and sailors, and an [[Future Strategic Tanker Aircraft|aerial refuelling service]], amongst other things.<ref>{{cite news|url=http://www.economist.com/node/8527469?story_id=E1_RVNSQGJ|access-date=2011-05-09|title=Defence spending: Under PFIre | newspaper = The Economist|date=2011-05-09}}</ref>

Individuals have speculated that some PFI projects have been shoddily specified and executed. For example, in 2005 a confidential government report condemned the PFI-funded Newsam Centre at [[Seacroft Hospital]] for jeopardising the lives of 300 patients and staff. The Newsam Centre is for people with lifelong learning difficulties and the mentally ill. The report said that there were shortcomings "in each of the five key areas of documentation, design, construction, operation and management" at the hospital, which cost £47m. Between 2001 and 2005 there were four patient suicides, including one which was left undiscovered for four days in an out-of-order bathroom. The coroner said that Leeds Mental Health Teaching NHS Trust, which is responsible for the facility, had failed to keep patients under proper observation. The government report said that the design and construction of the building did not meet the requirements for a facility for mental patients. The building has curving corridors which make patient observation and quick evacuation difficult. The report said that the building also constituted a fire hazard, as it was constructed without proper fire protection materials in the wall and floor joints. In addition, mattresses and chairs used below-standard fire-retardant materials. Patients were allowed to smoke in rooms where they could not be easily observed. The fire-safety manual was described as "very poor", and the fire-safety procedure consisted of a post-it note marked "to be provided by the Trust". The report concluded that "every section of the fire safety code" had been breached.<ref name="pplr">{{Citation| last = Hencke| first = David| title = Private Finance Hospital 'Putting Lives at Risk'| newspaper = The Guardian| date = 17 June 2005| url = https://www.theguardian.com/uk/2005/jun/17/publicservices.politics| location=London}}</ref>

On the other hand, the building of two new PFI Police Stations on behalf of Kent Police serving the Medway area and the North Kent area (Gravesend and Dartford) is credited as a successful PFI project. Supporters say that the new buildings take into account the modern needs of the police better than the 60s/70s building, and that another advantage is that the old buildings can be sold for income or redeveloped into the police estate.<ref name="Flagship Police HQ Formally Open">{{cite news | title = Flagship Police HQ Formally Open | publisher = BBC | date = 28 May 2008 | url = http://news.bbc.co.uk/1/hi/england/kent/7424254.stm}}</ref>

===Education===
KPMG investigations in 2008 and 2009 found that school renewals had beneficial impacts on educational outcomes and that the rate of improvement was higher in PFI schools than where construction or renewal was conventionally funded.<ref name=kpmg />{{rp|13}}<ref>KPMG, [https://www.infrastructureaustralia.gov.au/sites/default/files/2019-06/pfi_in_schools_KPMG_UK_2009.pdf PFI in school building – does it influence educational outcomes? KPMG’s Infrastructure Spotlight Report 2009 Edition], page 7, accessed on 27 August 2024</ref>

===National Health Service (NHS)===
In 2017 there were 127 PFI schemes in the [[English NHS]]. The contracts vary greatly in size. Most include the cost of running services such as facilities management, hospital portering and patient food, and these amount to around 40% of the cost. Total repayments will cost around £2.1 billion in 2017 and will reach a peak in 2029.  This is around 2% of the NHS budget.<ref name="nuffieldtrust1">{{cite news|last1=Appleby|first1=John|title=Making sense of PFI|url=https://www.nuffieldtrust.org.uk/resource/making-sense-of-pfi#so-whos-involved-with-these-deals-on-the-private-side-of-pfi|access-date=6 October 2017|publisher=Nuffield Trust|date=6 October 2017}}</ref>

A 2009 study by University College London, studying data at hospitals built since 1995, supports the argument that private-sector providers are more accountable to provide quality services: It showed that hospitals operating under PFI have better patient environment ratings than conventionally funded hospitals of similar age. The PFI hospitals also have higher cleanliness scores than non-PFI hospitals of similar age, according to data collected by the NHS.<ref>{{cite news|url=http://business.timesonline.co.uk/tol/business/industry_sectors/health/article7128092.ece|access-date=2011-05-09|title=PFI-funded hospitals outshine peers in study of cleanliness - Times Online|date=2011-05-09|location=London|work=The Times|first=Angela|last=Jameson}}{{dead link|date=September 2024|bot=medic}}{{cbignore|bot=medic}}</ref>

[[Jonathan Fielden]], chair of the [[British Medical Association]]'s consultants' committee has said that PFI debts are "distorting clinical priorities" and affecting the treatment given to patients. Fielden cited the example of [[University Hospital Coventry]] where the NHS Trust was forced to borrow money to make the first £54m payment owed to the PFI contractor. He said that the trust was in the ignominious position of struggling for money before the hospital's doors even opened. The trust could not afford to run all the services that it had commissioned and was having to mothball services and close wards.<ref name="phpc"/>

[[File:University hospital coventry1 5u07.JPG|thumb|right|250px|University Hospital Coventry]]
The high cost of hospitals built under PFI is forcing service cuts at neighbouring hospitals built with public money. Overspending at the PFI-funded Worcestershire Royal Hospital has put a question mark over services at neighbouring hospitals.<ref name="phhs"/> A [[strategic health authority]] paper in 2007 noted debts at two hospitals in south-east London: Princess Royal University Hospital and [[Queen Elizabeth Hospital, London|Queen Elizabeth Hospital]]. The paper attributed the debts in part to their high fixed PFI costs and suggested that the same would soon apply to Lewisham Hospital.

In 2012, seven NHS trusts were unable to meet the repayments for their private finance schemes and were given £1.5 billion in emergency funding, to help them avoid cutting patient services.<ref>{{cite news|title=NHS trusts struggling with PFI debts to get help|url=https://www.theguardian.com/society/2012/aug/28/nhs-trusts-pfi-debts-help|access-date=5 October 2014|newspaper=The Guardian|date=28 August 2012}}</ref>
* [[Barking, Havering and Redbridge University Hospitals NHS Trust]]
* [[Dartford and Gravesham NHS Trust]]
* [[Maidstone and Tunbridge Wells NHS Trust]]
* [[North Cumbria University Hospitals NHS Trust]]
* [[Peterborough and Stamford Hospitals NHS Foundation Trust]]
* [[St Helens and Knowsley Teaching Hospitals NHS Trust]]
* [[South London Healthcare NHS Trust]]

Peter Dixon, Chairman of [[University College London Hospitals NHS Foundation Trust]], with the largest PFI-built hospital in England, has gone on the record to say:

{{blockquote|We now have indexed payments for the next 35 years which at a time of growing concern over NHS budgets can only be a millstone. It isn't just that our scheme was expensive. Its very existence distorts whatever else needs to happen in this part of London and beyond. And that is before we get to paying for the much larger scheme at [[Barts and The London School of Medicine and Dentistry|Bart's and the London]] in a few years' time.|Peter Dixon<ref name="PFI is a liability"/>}}

The trust complained in July 2019 that inflexible [[HM Treasury|Treasury]] rules were preventing it from buying out its 40-year PFI contract, which could deliver savings of £30 million a year.  The contract equity holders are receiving around £20 million in annual dividends which is "double the figure envisaged at the start of the project and [is] projected to rise to £60m by the end of the deal".<ref>{{cite news |title=FT accuses Treasury of being inflexible over PFI buyout |url=https://www.hsj.co.uk/university-college-london-hospitals-nhs-foundation-trust/ft-accuses-treasury-of-being-inflexible-over-pfi-buyout/7025624.article? |access-date=26 August 2019 |publisher=Health Service Journal |date=26 July 2019}}</ref>

An anonymous NHS finance director pointed out in November 2015, that PFI payments are often linked to the [[Retail Price Index]] which has risen more rapidly than the NHS tariff.  He estimated that payments were about 3 percent higher than those incurred using traditional public dividend capital.<ref>{{cite news|title=Trusts seek more cash support and buyouts for PFIs|url=http://www.hsj.co.uk/topics/finance-and-efficiency/trusts-seek-more-cash-support-and-buyouts-for-pfis/5091688.article|access-date=11 December 2015|publisher=Health Service Journal|date=4 November 2015}}</ref>

[[File:PFI Protest placard.JPG|thumb|Demonstration, November 2006]]

[[Northumbria Healthcare NHS Foundation Trust]] was the first to buy out a PFI contract, borrowing £114.2 million from [[Northumberland|Northumbria County Council]] in a deal which reduced its costs by £3.5 million per year.<ref>{{cite news|title=Approval granted for groundbreaking PFI buyout|url=http://www.hsj.co.uk/hsj-local/acute-trusts/northumbria-healthcare-nhs-foundation-trust/approval-granted-for-groundbreaking-pfi-buyout/5071758.article#.U8KtSfldUk4|access-date=13 July 2014|publisher=Health Service Journal|date=9 June 2014}}</ref>

A report by the [[Centre for Health and the Public Interest]] in 2017 calculated that PFI companies had made pre-tax profits from the NHS of £831m in the previous six years.<ref>{{cite news|title=NHS 'leaking millions' in PFI contracts|url=https://www.bbc.co.uk/news/health-41086171|access-date=30 August 2017|work=BBC News|date=30 August 2017}}</ref> They calculate that PFI payments in the NHS will rise from £2.2 billion in 2019–20 to a peak of £2.7 billion in 2029–30.<ref>{{cite news |title=DEALING WITH THE LEGACY OF PFI – OPTIONS FOR POLICYMAKERS |url=https://chpi.org.uk/papers/reports/dealing-with-the-legacy-of-pfi-options-for-policymakers/ |access-date=27 November 2018 |publisher=Centre for Health and the Public Interest |date=18 October 2018}}</ref>

===Private sector===
[[Semperian]], [[Innisfree Ltd]] and the [[HICL Infrastructure Company]] are the main players in NHS contracts.<ref name="nuffieldtrust1"/>

===Employment===
When spending is tight, hospitals may prefer to retain medical staff and services by spending less on building maintenance. But under PFI, hospitals are forced to prioritise the contractual payments for their buildings over jobs and, according to figures published by the [[Department of Health]], these committed payments can account for up to 20% of operating budget.<ref name="Timmins 2011"/><ref name='Spending Squeeze'/> Nigel Edwards, head of policy for the [[NHS Confederation]], noted that:

{{blockquote|"A hospital with a PFI scheme [is] contractually bound to keep the maintenance up – and if you are spending 10 or 15 per cent on your buildings it means all the other efficiency and productivity gains you need have to come out of only 85 or 90 per cent of your budget."<ref name='Spending Squeeze'>{{Cite news
  | last = Timmins
  | first = Nicholas
  | title = Spending Squeeze To Hurt Hospitals The Most
  | newspaper = Financial Times
  | location = London
  | date = 23 January 2010}}</ref>}}

Dr Jonathan Fielden, chair of the [[British Medical Association]]'s consultants' committee has said that as a result of the high costs of a PFI scheme in Coventry "they are potentially reducing jobs".<ref name="phpc"/> In fact by 2005 the hospital trust in Coventry was anticipating a deficit of £13m due to PFI and "drastic measures" were required to plug the gap including shutting one ward, removing eight beds from another, shortening the opening hours of the Surgical Assessment Unit, and the "rationalisation of certain posts" – which meant cutting 116 jobs.<ref name="gfme"/>

Under PFI, many staff have their employment contracts automatically transferred to the private sector, using a process known as [[TUPE]]. In many cases this results in worse terms of employment and pension rights. Heather Wakefield, [[UNISON]]'s national secretary for local government, has said:

{{blockquote|Local authorities and health authorities have very good final-salary pension schemes. We have surveyed contractors in 'best value' [contracting out] deals. At only one company in the past three years was any pension provided. And that is the pattern [in transfers] across the public sector – not just in local government, and not just 'best value'. It happens in PFI too. TUPE does not apply to pensions. The Government is supposed to have revised TUPE, integrating the Acquired Rights [[Council Directive|Directive]] from the [[European Union|EU]]. That has not happened.<ref>
{{Citation
  | last1 = Morgan | first1 = Oliver
  | last2 = Mathiason | first2 = Nick
  | title = Public-private discord: Taxpayers will foot the bill if the City has got its sums wrong on PFI
  | newspaper = The Observer
  | date = 6 October 2006
  | url = https://www.theguardian.com/business/2002/oct/06/publicservices.publicservices
  | location=London}}
</ref>}}

===Debt===
The debt created by PFI has a significant impact on the finances of public bodies.<ref name="wesp"/> As of October 2007 the total capital value of PFI contracts signed throughout the UK was £68bn.<ref name="prsp"/> However, central and local government are committed to paying a further £267bn<ref name="Datablog 2010"/> over the lifetime of these contracts. To give regional examples, the £5.2bn of PFI investment in Scotland up to 2007 has created a public sector liability of £22.3bn<ref name="wesp"/> and the investment of just £618m via PFI in Wales up to 2007 has created a public sector liability of £3.3bn.<ref name="wewa">{{Citation| first1 = Mark| last1 = Hellowell| first2 = Allyson M.| last2 = Pollock| title = Written Evidence to the National Assembly for Wales Finance Committee with Regards to its Inquiry on Public Private Partnerships| year = 2007| publisher = University of Edinburgh| url = http://www.health.ed.ac.uk/CIPHP/Documents/EvidencetoWelshFinanceCommittee_Dec2007_000.pdf| url-status = dead| archive-url = https://web.archive.org/web/20090509081118/http://www.health.ed.ac.uk/CIPHP/Documents/EvidencetoWelshFinanceCommittee_Dec2007_000.pdf| archive-date = 9 May 2009}}</ref> However, these debts are small compared to other public-sector liabilities.<ref name=Economist1>{{cite news|url=http://www.economist.com/node/15731336?story_id=E1_TVSPTPPG|access-date=2011-05-09|title=PFInancing: The art of concealment | newspaper = The Economist|date=2011-05-09}}</ref>

Annual payments to the private owners of the PFI schemes are due to peak at £10bn in 2017.<ref name="Timmins 03/2010">{{Citation  | last=Timmins  | first=Nicholas  | title=PFI project costs exceed £200bn  | newspaper=Financial Times  | date=26 March 2010  | access-date=26 June 2010  | url=http://www.ft.com/cms/s/0/1c34b6f4-3877-11df-aabd-00144feabdc0.html  | archive-url=https://archive.today/20150506183627/http://www.ft.com/cms/s/0/1c34b6f4-3877-11df-aabd-00144feabdc0.html  | url-status=dead  | archive-date=6 May 2015  }}</ref> In some cases Trusts are having to 'rationalise' spending by closing wards and laying off staff, but they are not allowed to default on their PFI payments. As ''The Guardian'' explained "In September 1997 the government declared that these payments would be legally guaranteed: beds, doctors, nurses and managers could be sacrificed, but not the annual donation to the Fat Cats Protection League".<ref name="gfme"/>

Mark Porter, of the British Medical Association said: "Locking the NHS into long-term contracts with the private sector has made entire local health economies more vulnerable to changing conditions. Now the financial crisis has changed conditions beyond recognition, so trusts tied into PFI deals have even less freedom to make business decisions that protect services, making cuts and closures more likely."<ref name="Triggle 2010">{{Cite news
  | last = Triggle
  | first = Nick
  | title = Fears over £65bn 'NHS mortgage'
  | newspaper = BBC
  | location = UK
  | date = 13 August 2010
  | url = https://www.bbc.co.uk/news/health-10882522
  | access-date = <!-----21 September 2010----->}}</ref> [[John Appleby (economist)|John Appleby]], chief economist at the [[King's Fund]] health think-tank, said:

{{blockquote|"It is a bit like taking out a pretty big mortgage in the expectation your income is going to rise, but the NHS is facing a period where that is not going to happen. Money is being squeezed and the size of the repayments will make it harder for some to make the savings it needs to. I don't see why the NHS can't go back to its lenders to renegotiate the deals, just as we would with our own mortgages."<ref name="Triggle 2010"/>}}

[[File:HM Treasury east entrance.jpg|thumb|right|HM Treasury]]

Officials at the [[HM Treasury|Treasury]] have also admitted that they may have to attempt to renegotiate certain PFI contracts in order to reduce payments,<ref name="Timmins 03/2010"/> although it is far from certain that the private investors would accept this.

PFI contracts are generally [[off-balance-sheet]], meaning that they do not show up as part of the [[national debt]]. This [[finance|fiscal]] technicality has been characterized as a benefit and a flaw of PFI.

In the UK, the technical reason why PFI debts are off-balance-sheet is that the government authority taking out the PFI theoretically transfers one or more of the following risks to the private sector: risk associated with demand for the facility (e.g. under-utilisation); risk associated with construction of the facility (e.g. overspend and delay); or risk associated with the 'availability' of the facility. The PFI contract bundles the payment to the private sector as a single ('unitary') charge for both the initial capital spend and the ongoing maintenance and operation costs. Because of supposed risk transfer, the entire contract is deemed to be revenue rather than capital spending. As a result, no capital spend appears on the government's balance sheet (the revenue expenditure would not have been on the government balance sheet in any event). Public accounting standards are being changed to bring these numbers back onto the balance sheet.<ref name=Economist1/> For example, in 2007 Neil Bentley, the [[Confederation of British Industry|CBI]]'s Director of Public Services, told a conference that the CBI was keen for the government to press ahead with accounting rule changes that would put large numbers of PFI projects onto the government's books. He was concerned that accusations of "accounting tricks" were delaying PFI projects.<ref>{{Citation  | last=Timmins  | first=Nicholas  | title=Treasury to ensure taxpayer is not the loser in PFI deals  | newspaper=Financial Times  | date=17 October 2008  | url=http://www.ft.com}}</ref>

===Risk===
Supporters of PFI claim that risk is successfully transferred from public to private sectors as a result of PFI, and that the private sector is better at [[risk management]]. As an example of successful risk transfer they cite the case of the [[National Physical Laboratory, UK|National Physical Laboratory]]. This deal ultimately caused the collapse of the building contractor Laser (a [[joint venture]] between [[Serco]] and [[John Laing plc|John Laing]]) when the cost of the complex scientific laboratory, which was ultimately built, was very much larger than estimated.<ref name="tcnp"/>

On the other hand, Allyson Pollock argues that in many PFI projects risks are not in fact transferred to the private sector<ref name="Pollock 2005 3"/> and, based on the research findings of Pollock and others, George Monbiot argues<ref name="bwry"/> that the calculation of risk in PFI projects is highly subjective, and is skewed to favour the private sector:

{{blockquote|When private companies take on a PFI project, they are deemed to acquire risks the state would otherwise have carried. These risks carry a price, which proves to be remarkably responsive to the outcome you want. A paper in the [[British Medical Journal]] shows that before risk was costed, the hospital schemes it studied would have been built much more cheaply with public funds. After the risk was costed, they all tipped the other way; in several cases by less than 0.1%.<ref>
{{Citation
  | last1 = Pollock
  | first1 = Allyson M
  | last2 =  Shaoul 
  | first2 =Jean
  | last3= Vickers
  | first3=Neil
  | title = Private finance and "value for money" in NHS hospitals: a policy in search of a rationale?
  | journal = [[British Medical Journal]]
  | volume = 342
  | pages = 1205–1209
  | date = 18 May 2002
  | issue = 7347
 | doi = 10.1136/bmj.324.7347.1205
  | postscript = .| pmid = 12016191
  | pmc = 1123165
  }}</ref>}}

Following an incident in the [[Royal Infirmary of Edinburgh]] where surgeons were forced to continue a heart operation in the dark following a power cut caused by PFI operating company Consort, Dave Watson from Unison criticised the way the PFI contract operates:

{{blockquote|It's a costly and inefficient way of delivering services. It's meant to mean a transfer of risk, but when things go wrong the risk stays with the public sector and, at the end of the day, the public, because the companies expect to get paid. The health board should now be seeking an exit from this failed arrangement with Consort and at the very least be looking to bring facilities management back in-house.<ref>{{Citation
  | last = Carrell
  | first = Severin
  | title = Power cut leaves surgeons operating by torchlight at PFI hospital
  | journal = [[The Guardian]]
  | date = 21 April 2012}}</ref>}}

In February 2019 the [[Healthcare Safety Investigation Branch]] produced a report into mistakes involving piped air being mistakenly supplied to patients rather than piped oxygen and said that cost pressures could make it difficult for trusts to respond to safety alerts because of the financial costs of replacing equipment. Private finance initiative contracts increased those costs and exacerbated the problem.<ref>{{cite news |title=PFI contracts a 'systemic' barrier to safety improvement, warns watchdog |url=https://www.hsj.co.uk/quality-and-performance/pfi-contracts-a-systemic-barrier-to-safety-improvement-warns-watchdog/7024518.article |access-date=8 April 2019 |publisher=Health Service Journal |date=28 February 2019}}</ref>

===Value for money===
A [[National Audit Office (United Kingdom)|National Audit Office]] study in 2003 endorsed the view that PFI projects represent good value for taxpayers' money, but some commentators have criticised PFI for allowing excessive profits for private companies at the expense of the taxpayer. An investigation by Professor Jean Shaoul of Manchester Business School into the profitability of PFI deals based on accounts filed at [[Companies House]] revealed that the rate of return for the companies on twelve large PFI Hospitals was 58%.<ref name="phpc"/> Excessive profits can be made when PFI projects are [[refinancing|refinanced]]. An article in the [[Financial Times]] recalls the

{{blockquote|acute embarrassment of the early days of PFI, when investors in projects made millions of pounds from refinancings and it turned out that the taxpayer had no right to any share in the gains ... Investors in one of the early prison projects, for example, made a £14m windfall gain and hugely increased rates of return when they used falling interest rates to refinance.<ref>{{Citation | last=Timmins | first=Nicholas | title=Treasury to ensure taxpayer gains in PFI deals | newspaper=Financial Times  | date=17 October 2008  | url=http://www.ft.com/cms/s/0/28a8938c-9bd0-11dd-ae76-000077b07658.html |archive-url=https://ghostarchive.org/archive/20221210/http://www.ft.com/cms/s/0/28a8938c-9bd0-11dd-ae76-000077b07658.html |archive-date=10 December 2022 |url-access=subscription |url-status=live}}</ref>
}}

[[File:Skye Bridge - conner395.jpg|thumb|right|The Skye Bridge]]

While it is a catchy term, it is unclear what "value-for-money" means in practice and technical detail. A Scottish auditor once called it "technocratic mumbo-jumbo".<ref name=":whiteside">{{Cite book|last=Whiteside|first=Heather|title=Public-private partnerships in Canada|publisher=Fernwood Publishing|year=2016|isbn=978-1-55266-896-2|location=Halifax|oclc=952801311}}</ref>{{rp|chapter 4}} A number of PFI projects have cost considerably more than originally anticipated.<ref>{{cite web|url=http://anotherangryvoice.blogspot.com/2011/07/uk-government-procurement-waste.html|title=UK government procurement, a litany of ineptitude|date=29 July 2011}}</ref><ref>{{cite web|url=https://salford.academia.edu/farshidrahmani/Papers/454891/Cost_overruns_in_NHS_trust_hospitals_under_PFI_contracts|title=Cost overruns in NHS trust hospitals under PFI contracts|author=Farshid Rahmani}}</ref> The duplication of design costs when each bidder in the latter stages of project procurement is preparing its own design was the subject of some criticism: the [[Royal Institute of British Architects]] (RIBA) put forward a model known as "Smart PFI" in 2005, under which a traditionally appointed design team would prepare "example plans" which would be finalised and costed by PFI bidders.<ref>Waite, R., [https://www.architectsjournal.co.uk/archive/bsf-procurement-review-ribas-smart-pfi-takes-step-closer BSF procurement review: RIBA's Smart PFI takes step closer], [[Architects' Journal]], published 27 November 2009, accessed 5 February 2024</ref>

More recent reports indicate that PFI represents poor value for money.<ref name='BBCnews2011'>{{Citation
  | last=Tyrie | first=Andrew | title = PFI poor value for money, says MPs | newspaper = BBC News | date = 19 August 2011 | url = https://www.bbc.co.uk/news/uk-politics-14574059 | access-date = <!----- 25th July 2012 -----> }}</ref> A treasury select committee stated that 'PFI was no more efficient than other forms of borrowing and it was "illusory" that it shielded the taxpayer from risk'.

One key criticism of PFI, when it comes to value for money, is the lack of transparency surrounding individual projects.<ref>{{cite web|url=http://www.politics.co.uk/comment-analysis/2012/05/23/comment-pfi-is-dead-long-live-pfi|title=Comment: PFI is dead, long live PFI|date=23 May 2012|publisher=Politics.co.uk|access-date=30 September 2012}}</ref> This means that independent attempts, such as that by the Association for Consultancy and Engineering, to assess PFI data across government departments have been able to find significant variations in the costs to the taxpayer.<ref>{{cite web|last=Graham|first=Pontin|title=Performance of PFI: 1996-2010 Lessons Learned|url=http://www.acenet.co.uk/performance-of-pfi-1996-2010-lessons-learned/530/12/1/3/1fe7dc15-3aaf-492b-84a5-978a86f9b327|work=Financing Infrastructure series - ACE|publisher=Association for Consultancy and Engineering|access-date=25 May 2012|archive-url=https://web.archive.org/web/20150511222103/http://www.acenet.co.uk/performance-of-pfi-1996-2010-lessons-learned/530/12/1/3/1fe7dc15-3aaf-492b-84a5-978a86f9b327|archive-date=11 May 2015|url-status=dead}}</ref>

===Tax===
Some PFI deals have also been associated with [[tax avoidance]], including a deal to sell properties belonging to the UK government's own tax authority. The House of Commons [[Public Accounts Committee (United Kingdom)|Public Accounts Committee]] criticised [[HM Revenue and Customs]] over the PFI STEPS deal to sell about 600 properties to a company called [[Mapeley]], based in the [[tax haven]] of [[Bermuda]]. The committee said it was "a very serious blow indeed" for the government's own tax-collecting services to have entered into the contract with Mapeley, whom they described as "tax avoiders". Conservative MP [[Edward Leigh]] said there were "significant weaknesses" in the way the contract was negotiated. The government agencies had failed to clarify Mapeley's tax plans until a late stage in the negotiations. Leigh said: "It is incredible that the Inland Revenue, of all departments, did not, during contract negotiations, find out more about Mapeley's structure".<ref name="ccop"/>

===Bureaucracy===
The [[National Audit Office (United Kingdom)|National Audit Office]] has accused the government's PFI [[dogma]] of ruining a £10bn [[Ministry of Defence (United Kingdom)|Ministry of Defence]] project. The [[Future Strategic Tanker Aircraft]] project to develop a fleet of multi-role RAF tanker and passenger aircraft was delayed for over 5 years while, in the meantime, old and unreliable planes continue to be used for air-to-air refuelling, and for transporting troops to and from Afghanistan. [[Edward Leigh]], then [[Conservative Party (UK)|Conservative]] chair of the [[Public Accounts Committee (United Kingdom)|Public Accounts Committee]] which oversees the work of the NAO, said: "By introducing a private finance element to the deal, the MoD managed to turn what should have been a relatively straightforward procurement into a bureaucratic nightmare". The NAO criticised the MoD for failing to carry out a "sound evaluation of alternative procurement routes" because there had been the "assumption" in the ministry that the aircraft must be provided through a PFI deal in order to keep the numbers off the balance sheet, due to "affordability pressures and the prevailing policy to use PFI wherever possible".<ref name='Norton-Taylor 2010'>{{Citation
  | last = Norton-Taylor
  | first = Richard
  | title = Audit office slams MoD's PFI nightmare
  | work = The Guardian
  | date = 30 March 2010
  | url = http://news.bbc.co.uk/1/hi/education/6647783.stm
  | access-date = 23 June 2010}}</ref>

====Complexity====
Critics claim that the complexity of many PFI projects is a barrier to accountability. For example, a report by the Trade Union [[UNISON]] entitled "What is Wrong with PFI in Schools?" says:

{{blockquote|[[Local education authority|LEAs]] often seek to withhold crucially important financial information about matters such as affordability and value for money. In addition, the complexity of many PFI projects means that governors, teachers and support staff are often asked to "take on trust" assurances about proposals which have important implications for them.<ref>{{Citation| last = Unison| title = What is Wrong with PFI in Schools?| year = 2003| publisher = Unison| url = http://www.unison.org.uk/acrobat/13672.pdf}}</ref>}}

Malcolm Trobe, the President of the [[Association of School and College Leaders]] has said that the idea that contracting out the school building process via PFI would free up head teachers to concentrate on education has turned out to be a myth. In many cases it has in fact increased the workload on already stretched staff.<ref>{{Cite news
  | title = Heads highlight building problems
  | publisher = BBC
  | date = 11 May 2007
  | url = http://news.bbc.co.uk/1/hi/education/6647783.stm
  | access-date = 2 June 2010}}</ref>

===Waste===
A [[BBC Radio 4]] investigation into PFI noted the case of Balmoral High School in Northern Ireland which cost £17m to build in 2002. In 2007 the decision was made to close the school because of lack of pupils. But the PFI contract is due to run for another 20 years, so the taxpayer will be paying millions of pounds for an unused facility.<ref name="bnpl">{{Citation| last = Sheeran| first = Robin| title = Buy Now, Pay Later| newspaper = BBC| date = 21 June 2007| url = http://news.bbc.co.uk/1/hi/programmes/politics_show/6768083.stm}}</ref>

With regard to hospitals, Prof. [[Nick Bosanquet]] of [[Imperial College London]] has argued that the government commissioned some PFI hospitals without a proper understanding of their costs, resulting in a number of hospitals which are too expensive to be used. He said:

{{blockquote|There are already one or two PFI hospitals where wards and wings are standing empty because nobody wants to buy their services. There will be a temptation to say 'right we are stuck with these contracts so we will close down older hospitals', which may in fact be lower cost. Just closing down non-PFI hospitals in order to up activity in the PFI ones is not going to be the answer because we may have the wrong kind of services in the wrong places.<ref name="phpc"/>}}

In 2012, it was reported that dozens of [[NHS Trust]]s labouring under PFI-related debts were at risk of closure.<ref>{{cite web |last= Hern |first= Alex |date= 26 June 2012 |title= Live near one of these hospitals? Try not to get ill soon. |url= http://www.newstatesman.com/blogs/politics/2012/06/live-near-one-these-hospitals-try-not-get-ill-soon |work= The Staggers |publisher= NewStatesman.com |access-date= 26 June 2012 }}</ref>

According to [[Stella Creasy]], a self-acknowledged PFI "nerd", the fundamental problem was the rate of interest charged because of a lack of competition between providers. "Barts was a £1bn project. They’ll pay back £7bn. That is not good value for money".  She wants to see a windfall tax on the PFI companies.<ref>{{cite news |title=The Bedpan: It's difficult for people to imagine different could be good |url=https://www.hsj.co.uk/7024439.article? |access-date=20 March 2019 |publisher=Health Service Journal |date=17 February 2019}}</ref>

==Relationship with government==

=== Treasury ===
In July 1997 a PFI taskforce was established within the [[HM Treasury|Treasury]] to provide central co-ordination for the roll-out of PFI. Known as the Treasury Taskforce (TTF), its main responsibilities are to standardise the procurement process and train staff throughout government in the ways of PFI, especially in the private finance units of other government departments. The TTF initially consisted of a policy arm staffed by five civil servants, and a projects section employing eight private sector executives led by [[Adrian Montague]], formally co-head of Global Project Finance at [[investment bank]] Dresdner Kleinwort Benson. In 1999 the policy arm was moved to the [[Office of Government Commerce]] (OGC), but it was subsequently moved back to the Treasury. The projects section was part-privatised and became [[Partnerships UK]] (PUK). The Treasury retained a 49% '[[golden share]]', while the majority stake in PUK was owned by private sector investors. PUK was then staffed almost entirely by private sector procurement specialists such as corporate lawyers, [[investment banking|investment bankers]], consultants and so forth. It took the lead role in evangelising PFI and its variants within government, and was in control of the policy's day-to-day implementation.<ref name="wesp">{{Citation| first = Mark| last = Hellowell| title = Written evidence to the Finance Committee of the Scottish Parliament with regards to its inquiry into the funding of capital investment| year = 2007| publisher = University of Edinburgh| url = http://www.health.ed.ac.uk/CIPHP/Documents/ScottishFinanceCommittee.pdf}}{{dead link|date=April 2018 |bot=InternetArchiveBot |fix-attempted=yes }}</ref>

In March 2009, in the face of funding difficulties caused by the [[2008 financial crisis]], the [[HM Treasury|Treasury]] established an Infrastructure Finance Unit with a mandate to ensure the continuation of PFI projects.<ref name='wpga'>{{Citation| last = Timmins| first = N.| title = Big PFI waste project goes ahead| newspaper = The Financial Times| date = 9 April 2009| url = http://www.ft.com/cms/s/0/1e41d626-249f-11de-9a01-00144feabdc0.html| archive-url = http://wayback.vefsafn.is/wayback/20110809114932/http://www.ft.com/cms/s/0/1e41d626-249f-11de-9a01-00144feabdc0.html| url-status = dead| archive-date = 9 August 2011}}</ref> In April 2009, the unit stumped up £120m of public money to ensure that a new waste disposal project in Manchester would go ahead. Andy Rose, the unit head, said: "This is what we were set up to do, to get involved where private sector capital is not available."<ref name='wpga'/> In May 2009 the unit proposed to provide £30m to bail out a second PFI project, a £700m waste treatment plant in Wakefield. In response, [[Tony Travers]], Director of the [[Greater London Group]] at the [[London School of Economics]] described the use of public money to finance PFI as "Alice in Wonderland economics".<ref>{{Citation| last = Webb| first = Tim| title = Treasury set to bail out second recession-hit PFI| newspaper = The Observer| date = 10 May 2009| url = https://www.theguardian.com/business/2009/may/10/pfi-vt-bail-out-treasury| location=London}}</ref>

The House of Commons [[Public Accounts Committee (United Kingdom)|Public Accounts Committee]] has criticised the Treasury for failing to negotiate better PFI funding deals with banks in 2009. The committee revealed that British taxpayers are liable for an extra £1bn because the Treasury failed to find alternative ways to fund infrastructure projects during the [[2008 financial crisis]]. The committee "suggests that the government should have temporarily abandoned PFI to directly fund some projects, instead of allowing the banks – many of which were being bailed out with billions of pounds of public money at the time – to increase their charges . . . by up to 33%".<ref name="Treanor 2010">{{Citation
  | last1 = Treanor | first1 = Jill
  | last2 = Curtis   | first2 = Polly
  | title = Banks charged extra £1bn for PFI schemes
  | newspaper = The Guardian
  | date = 9 December 2010
  | url = https://www.theguardian.com/politics/2010/dec/09/private-finance-initiatives-costs-soared
  | access-date = 29 December 2010
  | location=London
}}</ref>

=== Scrutiny ===
The House of Commons [[Liaison Committee (House of Commons of the United Kingdom)|Liaison Committee]] has said that claims of commercial [[confidentiality]] are making it difficult for MPs to scrutinise the growing number of PFI contracts in the UK.<ref name="Pickard 2008">{{Citation
 |last       = Pickard
 |first      = Jim
 |title      = PFI deals 'not doing a good job'
 |newspaper  = Financial Times
 |location   = London
 |date       = 2 September 2008
 |url        = http://www.ft.com/cms/s/0/89b9f926-7886-11dd-acc3-0000779fd18c.html
 |archive-url = https://archive.today/20150507003154/http://www.ft.com/cms/s/0/89b9f926-7886-11dd-acc3-0000779fd18c.html
 |url-status   = dead
 |archive-date = 7 May 2015
 |access-date = 11 June 2010
}}</ref> The [[National Audit Office (United Kingdom)|National Audit Office]] (NAO) is responsible for scrutinising public spending throughout the UK on behalf of the [[British Parliament]] and is independent of Government. It provides reports on the value for money of many PFI transactions and makes recommendations. The [[Public Accounts Committee (United Kingdom)|Public Accounts Committee]] also provides reports on these issues at a UK-wide level. The [[devolution|devolved]] governments of Scotland, Wales and Northern Ireland have their own equivalents of the NAO such as the Wales Audit Office and the Northern Ireland Audit Office which review PFI projects in their respective localities. In recent years the Finance Committees of the [[Scottish Parliament]] and the [[National Assembly for Wales]] have held enquiries into whether PFI represents good value for money.

=== Local government ===
PFI is used in both central and local government. In the case of local government projects, the [[Capital (economics)|capital]] element of the funding which enables the [[local authority]] to pay the private sector for these projects is given by central government in the form of what are known as PFI "credits". The local authority then selects a private company to perform the work, and transfers detailed control of the project, and in theory the [[risk]], to the company.

In 2000, [[South Gloucestershire Council]] used PFI for household waste and recycling services, selecting private company [[Suez (company, 2015)|Suez]] to deliver these services for 25 years.<ref>{{Cite web |last=Wilson |first=Kate |date=2024-09-17 |title=New £120m waste collection contract for South Gloucestershire |url=https://www.bristolpost.co.uk/news/bristol-news/new-120m-waste-collection-contract-9558056.amp |access-date=2024-09-17 |website=Bristol Live |language=en}}</ref>

=== Appraisal process ===
[[Jeremy Colman]], former deputy general of the [[National Audit Office (United Kingdom)|National Audit Office]] and [[Auditor General for Wales]] is quoted in the [[Financial Times]] saying that many PFI appraisals suffer from "spurious precision" and others are based on "pseudo-scientific mumbo-jumbo". Some, he says, are simply "utter rubbish". He noted government pressures on contracting authorities to weight their appraisals in favour of taking their projects down the PFI route: "If the answer comes out wrong you don't get your project. So the answer doesn't come out wrong very often."<ref>{{Citation| last = Timmins| first = N.| title = Warning of 'Spurious' Figures on Value of PFI| newspaper = The Financial Times| date = 5 June 2002| url = http://www.ft.com}}</ref>

In a paper published in the [[British Medical Journal]], a team consisting of two [[public health]] specialists and an economist concluded that many PFI appraisals do not correctly calculate the true risks involved. They argued that the appraisal system is highly subjective in its evaluation of risk transferral to the private sector. An example was an NHS project where the risk that clinical cost savings might not be achieved was theoretically transferred to the private sector. In the appraisal this risk was valued at £5m but in practice the private contractor had no responsibility for ensuring clinical cost-savings and faced no penalty if there were none. Therefore, the supposed risk transfer was in fact spurious.<ref>{{Citation| last1 = Gaffney  | first1 = D.| last2 = Pollock | first2 = Allyson M.| last3 = Price | first3 = D.| last4 = Shaoul | first4 = J.| title = PFI in the NHS: is there an economic case?| journal = British Medical Journal| volume = 319| issue =7202| pages =116–9| year = 1999| doi = 10.1136/bmj.319.7202.116| pmid = 10398642| pmc = 1116198}}</ref>

==References==
{{Reflist|30em}}
{{Refbegin}}
{{Refend}}

==External links==
*House of Commons Library (2001), [https://web.archive.org/web/20091007205715/http://www.parliament.uk/commons/lib/research/rp2001/rp01-117.pdf The Private Finance Initiative (PFI)], Research Paper 01/117
* Northern Ireland Audit Office report (2004) into PFI in the health sector [https://web.archive.org/web/20040818035228/http://www.niauditoffice.gov.uk/pubs/onereport.asp?arc=False&id=144&dm=0&dy=0].
* {{Citation
  | first1 = Mark
  | last1 = Hellowell
  | first2 = Allyson M.
  | last2 = Pollock
  | author-link2=Allyson Pollock
  | title = The PFI: Scotland's Plan for Expansion and its Implications
  | year = 2007
  | publisher = University of Edinburgh
  | url = http://www.sps.ed.ac.uk/__data/assets/pdf_file/0004/64354/scotland_implications.pdf}}
* Jane Broadbent, 2004. [http://www.cimaglobal.com/Documents/ImportedDocuments/tech_resrep_the_private_finance_initiative_in_the_national_health_service_2004.pdf ''Private Finance Initiative in the National Health Service: The Nature, Emergence and the Role of Management Accounting in Decision Making and Post-decision Project Evaluation'']. Chartered Institute of Management Accountants
* {{citation|last1=Foot|first1=Paul|author-link1=Paul Foot (journalist)|title=P. F. Eye: An idiot's guide to the Private Finance Initiative|url=http://drphilhammond.com/blog/wp-content/uploads/2014/12/PFI-Report-Private-Eye-2004.pdf|work=[[Private Eye|Private Eye: Special Report]]|issue=1102|date=March 2004}}
{{Public-private Partnership}}
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[[Category:Economy of the United Kingdom]]
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