The United Kingdom has been a leading player in the development of Public-Private Partnerships (PPPs) since the inception of the Private Finance Initiative (PFI) in the early 1990s. PFI is a structure that introduced project finance into UK public services for the first time. Under PFI, a private sector consortium builds public assets and services them over a term of 25 to 30 years in exchange for an availability payment. Successive governments have taken full advantage of the policy’s ability to leverage private finance and thus generate additional infrastructure investment, beyond typically constrained capital budgets.
An often under-reported feature of the UK’s PPP policy is the variety of approaches it takes.
The UK’s devolved political structure has encouraged numerous models to evolve, with Scotland, England and Northern Ireland all following different paths that reflect local needs. Now it is Wales’ turn to enter the fray. the Mutual Investment Model, which will be used for both economic and social infrastructure projects. So we have another acronym to add to the ever-growing list, along with PPP, PFI, PF2, NPD, DBFM and more—but what else is new?
Wales has hitherto been a reluctant user of PPP-style projects compared with the rest of the UK. England has undertaken over £50 billion of investment in PFI projects, Scotland over £5 billion, and Wales just £500 million. Political concerns about the UK’s traditional PFI approach have driven this; there has always been controversy over the lack of political control over public assets and deemed excessive private sector profits generated through PFI. Read the article in full on the World Bank Group Infrastructure & Public-Private Partnerships blog.