What does the Chancellor’s renouncing of PFI’s mean for funding of public projects?
Phillip Hammond proudly announced in his Budget: “I have never signed off a PFI contract as chancellor, and I can confirm today that I never will. I can announce that the government will abolish the use of PFI and PF2.” But what does this mean for clients? Should it be a cause for concern?
For all of the fanfare, we do not anticipate huge implications for the public sector or the industry that serves it. The announcement comes at a time when commentators are already suggesting that the public sector is turning its back on PFI schemes.
Also, and it’s an important point to stress, the government is still backing the public private partnership model, which delivers many alternative and better routes to carry out successful projects. Word is that the government is keeping its options open, with a view to using a type of PFI model that is structured differently to ‘deliver value for the taxpayer and genuinely transfer risk to the private sector’.
PPPs are here to stay and are essential in order to address the under-investment in buildings and infrastructure across the public sector, not least for the NHS where there is a £3bn funding gap. At Breathe, we don’t do PFI – we have found a better way. We use innovative finance solutions and rely on a financing model that provides transparent pricing mechanisms for clients like the NHS to address urgent backlog issues while delivering superior and guaranteed returns. The client actively participates in the governance structure to ensure full transparency as well as value for money.
Through such an approach, the acquisition and management of energy assets can deal with the critical issues that need attention but also provide ongoing asset lifecycle funding, improved workplace environments and increased resilience.
We see the death of PFI as an opportunity for the industry to evolve and deliver better value.