Private Finance Initiative

The Private Finance Initiative (PFI) has become a widely used mechanism for delivering public services in the UK. The crucial requirements for entering into a PFI scheme are that the scheme must offer better value for money (VFM) than conventional procurement and be affordable. Since it was first introduced in 1992, there has been much controversy surrounding PFI. This study attempts to contribute to the debate over the benefits and costs of the scheme. Particularly, the study considered the extent to which VFM and affordability are actually demonstrated by the existing PFI projects and the performance of the PFI private sector providers. The study also recognised several other PFI issues such as the transfer of risks and the credibility of the public sector comparator (PSC) which are crucial to the assessment of VFM.