EdGrimshaw.com

The private finance initiative (PFI) is a procurement method which secures private funding for public institutions in return for part-privatisation. PFI is also an operational framework which transfers responsibility, but not accountability, for the delivery of public services to private companies. PFI projects aim to deliver infrastructure on behalf of the public sector, together with the provision of associated services such as maintenance.

For those of us working in hospitals trying the deliver efficiencies, the lemming like race over the cliff over last 12 years to invest through PFI has meant that the taxpayer will have been ripped off and public bodies have a disproportionate amount of fixed cost tied up in badly built estate around hospitals up and down the land.

The global financial crisis which began in 2007 presents PFI with difficulties because many sources of private capital have dried up, nevertheless PFI remains the UK government's preferred method for public sector procurement. In January 2009 the Labour Secretary of State for Health, Alan Johnson reaffirmed this commitment with regard to the health sector, stating that “PFIs have always been the NHS’s ‘plan A’ for building new hospitals. You had better get reading that economics primer quickly Alan! It just goes to show how a mouthpiece of government can talk with authority without a clue of what is happening on the ground.

The PFI mess will burden down the public sector for 30 years to come. Not just the badly negiotiated deals but extortionate maintainance contracts in buildings that sometimes begin to crumble almost as soon as the politicians cut the ribbons and unveil the plaques on the new build. The cost per square metre amounts to almost a 40% higher cost than the traditional build, so if you have been PFId your going to have make more savings elsewhere.