ECONOMICS

THE REVISED GOVERNMENT PRIVATE FINANCE INITIATIVE

Introduced by Rodney Tye, the Convener, on 12 March 1998

The PFI was an idea of the previous Conservative government but had made slow progress. The present Labour Paymaster-General had sought to accelerate matters. He had a projected list of fifty ventures under different Government departments and some local authorities. The idea still seemed difficult to carry forward.
The intention was for private finance not just to put up buildings, extend railways and establish computer systems, for example, but to manage the assets as well. Any contract was to be long-term with risk going from the public to the private sector.
At present, the different approach towards acceptable risk between the Treasury and private financiers seems to be a major cause of the delays. An attraction for the Government is that these ventures do not count against the Public Sector Borrowing Requirement.
During the discussion there was agreement that the concept seemed a good idea but no surprise at the difficulties encountered. The different approaches to accounting, particularly for capital assets, was a stumbling block. The meeting could see how it had worked for prisons but had greater difficulty with projects like transport schemes and school building maintenance. In the future, many changes in the funding of education were foreseen, perhaps with state schools being built and run by private companies, although some opposition to this was expected from the teaching unions.
Some suggestions were made for projects which might be suitable for PFI funding for Bath: a tramway network, city-wide; a Park & Ride scheme; a concert hall / conference centre; another bridge over the River Avon; and a contract for the repair and maintenance of city pavements. Such proposals might be discussed with the Public Private Partnership Programme organisation which can provide further information on the subject.
Rodney Tye