The Treasury has announced this morning that it will be reviewing the private finance initiative (PFI) and consider other delivery models.
The Chancellor George Osborne,launching the review said
George Osborne, said:
“We have consistently voiced concerns about the misuse of PFI in the past and we have already taken steps to reduce costs and improve transparency.
”But the review I have announced today will take this a step further with a fundamental reassessment of PFI. We want a new delivery model which draws on private sector innovation, but at a lower cost to the taxpayer and with better value for public services.”
The model set up under Labour,has come under a great deal of criticism as the rising costs of debt finance since the credit crunch meant the scheme,where contractors finance, build and run projects,may not represent value for money.
The Treasury says that its approach to reform the PFI model will look to create a model which is cheaper, accesses a wider range of private sector financing sources and strikes a better balance of risk between the private and the public sectors.