Private Finance Initiative

I would appreciate feedback from the party, particularly from those in local government, about the workings of PFI (or PPP). My colleagues and I in the Treasury team have organised a consultation session at Conference on this issue as part of our policy development (Sunday 16th September, 10.00–12.30 in the Albert Room at the Grand Hotel, Brighton).

There shouldn’t be an ideologically dogmatic approach to PFI. We should be comfortable with the broad idea of public/private partnership and a genuine sharing of risk and reward. There are some things which the best of the private sector is good at: efficient project management and delivering construction projects on time and on budget.

But there has been a lot of disillusionment in practice. The Government used PFI to circumvent the public borrowing rules. There has been poor value for money in many cases. Some Whitehall departments, NHS managers and local councils have had sophisticated private sector negotiators running rings around them. Major problems have arisen – as with schools in my Twickenham constituency – when PFI contractors (Jarvis in my case) went bust. Hospitals – the rebuilt, but cash strapped, West Middlesex hospital which services my constituency is an example – have been landed with large, non-negotiable, fixed costs for a generation. I.T. has been a disaster area for PFI (indeed, the government has stopped new ones). There is a lot of overcharging and questionable benefit in the ‘soft’ end of PFI – consultancy; add-on services like cleaning and maintenance.

My instincts are that there should be a more critical, restrictive, approach to the use of PFI. But any new policy needs to be guided by evidence and experience. Many of our members have both to contribute. I look forward to hearing from you either directly or through this consultation website.