This report by the PricewaterhouseCoopers Public Sector Research Centre examines the long-term benefits of the Private Finance Initiative (PFI) in the United Kingdom given the impacts that the International Financial Reporting Standards, which are to be applied from 2008–09, could have on it.
The report argues that it seems safe to assume that most of PFI projects will be on balance sheet in future. The case for using PFI will therefore turn on its supposed intrinsic merits as a procurement method offering better value for money.
The report therefore seeks to examine the benefits of PFI and whether these benefits outweigh any additional costs associated with it. It presents five case studies on the use of public–private partnership projects, including in areas where those projects do not receive off-balance-sheet treatment.
The report finds that procurement outcomes in the United Kingdom have improved as a result of the involvement of the private sector in delivering public infrastructure and related services, especially in the analysis, management and mitigation of risk. However, the report argues that the challenge for the public sector is to allocate risks optimally between itself and the private sector and run procurement programmes and negotiate individual deals so that the private sector receives an appropriate but not excessive reward.