After PFI


PFI must be abolished and replaced with a new model of public sector procurement, writes Jesse Norman MP in After PFI published on Monday 7 May by the Centre for Policy Studies.

Jesse Norman, who has led scrutiny of the flaws in PFI in the Treasury Select Committee, shows that PFI has been one of the costliest experiments in public policy making ever attempted. It has led to £200 billion of public debt, the equivalent to £8,000 for every household in the country.

Originally introduced by Norman Lamont in 1992, it was greatly expanded by New Labour under whom total debts incurred through PFI projects rose by ten times in ten years. A significant attraction of the PFI for New Labour was that major capital projects were treated as “off-balance sheet” expenditure.

For the first time, he now sets out a detailed programme of reform with 18 recommendations including:

  • Placing all past and future liabilities on the government balance sheet as soon as possible
  • Establishing a new central unit across government to monitor all PFI-style projects, to advise on best practice, to educate actual and potential public sector clients on contract management and to generate greater “shared client power.”
  • Ending the requirement to bundle “soft services” with infrastructure projects
  • Making existing and future contracts far more transparent

Tim Knox, Director of the Centre for Policy Studies comments:

“The extraordinary cost and opacity of PFI under New Labour must never be allowed to happen again.  Over £200 billion of new infrastructure is needed over the next decade. We cannot afford to get it so wrong again.”

Jesse Norman MP - Monday, 7th May, 2012