The Private Finance Initiative (PFI) has been used by government over the last two decades to build hospitals and other care facilities. PFI schemes involve government using the private sector to borrow money and then contracting with the private sector to build and run the facility. There is a substantial evidence base which exists on the effects of this policy on the configuration and delivery of healthcare services.
Some important articles on this subject can be found below:
1. 2011 Treasury Select Committee Report on the Private Finance Initiative
This report by the Treasury Select Committee in 2011 finds that private finance has always been more expensive than government borrowing, but since the financial crisis the difference between the costs has widened significantly.
2. The private finance initiative Planning the “new” NHS: downsizing for the 21st century Allyson M Pollock, Matthew G Dunnigan, Declan Gaffney, David Price, Jean Shaoul BMJ. 1999;319:179-184
This article in the BMJ in 1999 based on analysis of PFI business cases finds that hospitals funded through the private finance initiative are being planned on the basis of financial, not clinical, needs and claims that the private finance initiative will result in a shrunken NHS, inadequate to meet the needs of the population.
3. PFI in the NHS—is there an economic case? Declan Gaffney, Allyson M Pollock, David Price, Jean Shaoul BMJ 1999;319:116–9
This BMJ article finds that investment under the private finance initiative costs more than public sector procurement.
4. NHS capital expenditure and the private finance initiative – expansion or contraction? Gaffney, D, Shaoul, J, Price, D, Pollock, A M BMJ. 1999;319:48-51
This study finds that the high costs of private sector financing have increased affordability problems at national and local level The increased costs of the private finance initiative are being met from hospital closure programmes, reductions in services and capacity, subsidies from the Treasury, NHS block capital allocations, and trusts’ operational budgets.
5. The politics of the private finance initiative and the new NHS. Gaffney, D, Shaoul, J, Price, D, Pollock, A M BMJ. 1999;319:249-253
This article in the BMJ in 1999 predicts that the impact of PFI In the NHS, will lead to a shrinkage in service provision combined with budget constraints could force primary care trusts to redefine entitlement to NHS care and to seek privately funded solutions for those who can afford to pay, leaving a rump service.
6. PFI and “value for money” in NHS hospitals: a policy in search of a rationale? Vickers, N, Shaoul, J, Pollock, A M BMJ. 2002;324:1205-1209.
This article in the BMJ in 2002 provides evidence that the justification for using private finance—that it offers value for money through lowering costs over the life of the project and by removing risk from NHS trusts—is a sleight of hand.
7. Private finance initiatives during NHS austerity. Pollock, A M, Price, D, Liebe, M BMJ 2011;342. doi:10.1136/bmj.d324
This BMJ article in 20011 finds that the NHS is facing serious revenue pressures if it is to meet the target of £15-20bn efficiency savings by 2013-14. A major source of revenue pressure for trust budgets in England is the annual private finance initiative (PFI) charge, which is ring-fenced and indexed to inflation. Lack of control over PFI costs has serious implications for quality and levels of NHS care. This paper examines the implications for clinical services in the context of ring-fencing payments for PFI.
8. Paul Gosling How the Big Four Accountancy firms have PFI under their thumbs.
This report from UNISON looks at the conflicts of interest which have arisen within the accountancy profession in the development of the Private Finance Initiative.
9. David Rowland and Allyson Pollock ‘Understanding the Private Finance Initiative – the essential guide for School Governors’ UNISON 2002.
This report provides an accessible guide to the Private Finance Initiative aimed at School Governors and focuses on the use of the Private Finance Initiative in building schools.
10. Jean Shaoul., A Stafford , Pamela Stapleton. “The Cost of Using Private Finance to Build, Finance and Operate Hospitals.” Public Money and Management 28, no. 2(2008) : 101-108.
This article analyses the cost of using private finance to build hospitals under the UK government’s Private Finance Initiative (PFI).
11. Sally Ruane: ‘Corporate and political strategy in relation to the Private Finance Initiative in theUK’ Critical Social Policy Critical Social Policy November 2010 vol. 30 no. 4 519-540
This article looks at how governments and businesses have sought to develop strategies to shape both PFI’s evolution and its implementation.
12. Public services and the private sector – A response to the IPPR, Allyson Pollock, Jean Shaoul,David Rowlandand Stewart Player
This report addresses the arguments provided by the IPPR Commission on public private partnerships relating to risk transfer and service improvements and includes evidence from other countries and sectors outside of the health setting where public private partnerships have been used.
13. Hellowell, M and Vecchi, V (2012), ‘An evaluation of the projected returns to investors on 10 PFI projects commissioned by the National Health Service’, Financial Accountability and Management, Vol.28, No.1, p.77-100.
Drawing on the financial models of 10 PFI projects commissioned by the UK National Health Service (NHS), this article identifies the returns that are projected to be earned by private investors and evaluates these through the application of corporate finance methods.
14. Gerti Dudkin and Timo Välilä Transaction Costs in Public-Private Partnerships: A first look at the Evidence: Economic and Financial Report 2005/03, European Investment Bank.
This paper presents the results of one of the first systematic analyses of the magnitude and determinants of transaction costs in public-private partnerships (PPPs).
15. Mark Hellowell and Allyson M. Pollock ‘Do PPPs in Social Infrastructure Enhance the Public Interest? Evidence from England’s National Health Service’ Australian Journal of Public Administration, Vol. 69, No. S1, pp. S23-S34.
This paper shows that the interest rate on private finance contains a significant element of ‘excess return’ to investors, and there is no evidence that this ‘excess cost’ to the public sector is offset by greater efficiency through the contracting process. It concludes that the private financing of public capital investment is highly problematic – and can have a serious impact on the finances and capacity of public authorities.
16. Hellowell, M and Pollock, AM (2009), ‘Non-profit distribution: the Scottish approach to private finance in public services’, Social Policy and Society. Vol 8 (3), pp. 405-418.
This article provides an analysis of the Scottish Government’s approach to the use of private ﬁnance in public services. It concludes that, while NPD provides the Government with an important political beneﬁt, in being seen to safeguard the ‘public interest’ while working within UK- wide budgetary constraints, the decision to continue with private ﬁnance carries a high economic cost.