Private Finance Initiative: part one

Citation

Palmer, S. (1998), "Private Finance Initiative: part one", Journal of Property Valuation and Investment, Vol. 16 No. 2. https://doi.org/10.1108/jpvi.1998.11216bag.001

Private Finance Initiative: part one

Keywords Internet, Private finance initiative, The Web

Private Finance Initiative: part one

The Conservative Government launched the Private Finance Initiative (PFI) in November 1992. Initial response was not very positive and the early years were beset by contention and controversy. A review of the early development of PFI can be read on the Web pages of the company Project Management International plc ( http://www.infoser.com/infocons/pmi/MainPage.html) which publishes its newsletter Project Management Insight over the Internet. Issue 4 of this newsletter was entitled "The UK's Private Finance Initiative ­ making it work" and covers, inter alia, "The development of PFI", "Effective management" and "Risk issues". Not all the links from the initial page seem to work but if you move to (sorry about the address!) http://www.infoser.com/ infocons/pmi/insight/issue_4/ins4b.html you can read the whole document.

The company identifies that the early problems were partly cultural and partly practical. Culturally, there was perhaps a resentment on behalf of the public sector of the assumption that it is the private sector which is most innovative, more efficient and most capable of achieving true value for money. Perhaps compounding these beliefs is the concern that the "transfer of assets" might amount to nothing more than "selling off the family silver". On the practical side, PFI is often perceived as lacking in "rules", model agreements and so on.

However, by the time the Treasury published its second bi-annual review Progressing the Private Finance Initiative in 1995, there was a target of approaching £5 billion capital value of new projects in 1995/96. There has been a continual development of the Initiative and in the Financial Statement and Budget Report, July 1997 the Government committed itself to the continuance of PFI "The Government sees productive Public/Private Partnerships as being key to delivering high quality public services that offer the taxpayer value for money...Effort will be focused where it will achieve results, cutting costs for the public and private sectors alike...The Government is determined to make PFI work where appropriate". In line with the recommendations of the Bates Review a new Treasury Task Force has been established.

The Treasury Task Force: Private Finance Projects Team has its own Home Page which can be found at http://www.treasury-projects-taskforce.gov.uk. As befits the Task Force, the Web site itself is a Public/Private Partnership and is sponsored by Berwin Leighton and DTZ Debenham Thorpe. The structure of the Treasury Task force is described thus: "The Task Force has a projects and a policy arm. The projects arm has a limited life of two years. The head of the projects arm is Adrian Montague, Chief Executive Projects, and he is supported by eight executives form the private sector with direct project management, financial and legal experience. The policy arm has a lead responsibility for rules and best practice governing PFI and other public private partnerships. The head of the policy arm is Peter Wanless. This function will not be permanent but will be reviewed from time to time".

The OJEC's link on the top level page takes you to a searchable database ( http://www.treasury-projects-taskforce.gov.uk/ojecs/main.htm). This database contains all OJEC (Official Journal of the European Community) notices for projects advertised under the UK Government's Private Finance Initiative which have been registered with the Office for Official Publications of the European Communities (EUR-OP) since 21 September 1996. These data are updated daily, by Context Electronic Publishers, from EUR-OP's databases. You can choose to browse a list of all new and current OJCEs (in chronological order), to browse a list of expired OJCEs, or to search the database by entering either "words describing a concept" or "keywords you wish to find information about". I am not entirely certain what the difference is between these two types of search, I entered the words "car parks" and seemed to retrieve the same documents both times. I also tried searching on "fraud" (just out of interest!) but both search methods retrieved "no documents"! Browsing through the list is a fascinating way of becoming acquainted with the diversity of projects covered by this initiative ­ from energy management in Andover to a police station in Penrith and a bus station in Belfast; all human life is there.

There is also a link to Tenders on the Web ( http://www.tenders.co.uk). this is a database of public sector contracts from the EU, USA, and Japan. It is updated five days a week and contains all documents published in the Supplement to the Official Journal of the European Communities. Tenders on the Web is a subscription service, but you can search the sample database free. The Task Force pages also show a link to the Ministry of Defence Public/Private Partnership Unit. Unfortunately the linked URL has been incorrectly specified. The correct address for the site is http://www.mod.uk/pfu/intro.htm (not introd.htm as given). The MoD Page gives an introduction to PFIs with the Ministry of Defence but the PFI Projects Database has not been updated since November 1997 and so is of limited use.

The other link from the Task Force Home Page is to the Public Private Partnerships Programme Ltd (4Ps) ­ the URL for this is http://www.treasury-projects-taskforce.gov.uk/contacts/pppp.htm The Public Private Partnerships Programme Ltd has been established "with the ambitious aim of delivering greater investment in local services through partnerships between the public and private sectors. It is intended that through such partnerships enhanced services can be delivered to local communities in the most cost-effective way." However, this site is only an advertisement for the services of 4Ps which "in conjunction with Newchurch & Co. operate a database of local government PFI projects in England and Wales. On payment of an annual fee of £200+ VAT, registered users may request searches, updates and reports from the database manager, and replies will be faxed within 24 hours".

The final element of the Task Force Home Page is the "Guides to PFI". These cover "Generic guidance", "Policy statements", "Technical notes" and "Case studies". I thought these pages, the direct URL of which is http://www.treasury-projects-taskforce.gov.uk/studies/main.htm, very well written and a useful starting point for anyone considering becoming involved in PFI.

As indicated by the heading, this article has been the first part of my look at the Private Finance Initiative and I have concentrated on official sources of information. In the next issue of this journal I shall identify sites providing information more specifically aimed at the Chartered Surveyor. I shall also review some of the sites set up by companies which offer advice on the Initiative.

Scarlett PalmerThe Department of Land Management and Development,University of ReadingE-mail: s.h.palmer@reading.ac.uk