Should we encourage a resurgence of PPP/PFI to deliver the infrastructure improvements needed in the UK?

Question

What are the arguments for and against PPP/PFI schemes?
What lessons should we take from the past experiences?
How much risk should be transferred to the private sector and where in the development process should that risk transfer start and end?
How might the process be simplified such that most ‘everyday professionals’ other than the funders expensive legal advisers can readily understand it?
How could it help bring about sustainable productivity growth?
How do you ensure it provides long term value for money and not just a short term, off balance sheet boost to the economy?

Tom Spilsted · Answer

Steve for me the PFI process did many positive things, completing vital infrastructure quicker than was traditionally the case for example hospitals, and ensuring maintenance budgets were part of the contract, hence why many writers believe the “build cost” was too high and didn’t realise maintenance for say 25 years was in the price.
The problem became for me the cottage industry around it in particular overly complex legals and too much of that, the risk transfer wasn’t based on who was best placed to manage the risk. The scale of the hospital projects and the liabilities transferred was too large for any construction balance sheets. Unlikely in my view to be used again especially as cost of capital was too high for low risk to lender.

Should we encourage a resurgence of PPP/PFI to deliver the infrastructure improvements needed in the UK?

Infrastructure

PPP

infrastructureimprovements

PFI

improvements

Steve Hardy

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