HISTORIC PRESS RELEASE : New steps to drive forward PFI and PPPs – Alan Milburn [February 1999]

The press release issued by HM Treasury on 2 February 1999.

Chief Secretary Alan Milburn today outlined how the Government will drive forward the development of the Private Finance Initiative (PFI) and new forms of Public Private Partnerships (PPPs) in his first major speech on the subject.

Mr Milburn said that the Government will pursue a twin-track approach – improving and extending the PFI while alongside that developing and defining other forms of PPP.

Speaking at a Transport PFI Conference in London, Alan Milburn said:

“This Government has revitalised PFI. We have got PFI working in sectors like health where it had not worked before. We have come a long way in the last 21 months but recognise that there is more to do to make PFI and PPPs more generally a genuine national success story.

“We are pioneering new ways of doing things. New partnerships between the public and private sectors. A new understanding that improved public services and better value for money go hand in hand.

“This Government is committed to public private partnerships in general and PFI in particular. In the past, the dogma of the right insisted that the private sector should be the owner and provider of public services. And the left insisted this was all the responsibility of the state. The modern approach to public services rejects these arguments both of the old right and the old left.

“In many cases the best way forward is through new partnerships between the public and private sectors. Where each brings something to the table. Where we combine private sector enterprise experience with public service values. For this Government the key test is what works. We recognise that what the public want is better quality, more responsive public services. Quite rightly, they want their services to be both dependable and modern. Their concern – like the Government’s – is about outcomes not ownership.

“In developing and defining PPP models we will build on our success in getting PFI working. Ours will be a twin track approach. That means improving and extending the PFI and building on the reservoir of expertise that is growing by the day in both the public and private sectors in finding forms of PPP that best suit the specific needs of particular public services.

“We will be taking action to make PFI deals easier to complete. We are now looking at how to streamline the process of putting a PFI deal together. There is little doubt that the similarities between PFI deals means that both time and money could be saved by having more standard template contracts. We will publish a guidance paper on standard model clauses by the end of this month. And next month we will publish guidance on accounting treatment that will help determine the optimal level of risk transfer that will deliver value for money.

“We will continue to improve, identify and develop new opportunities and partnerships with both the public and private sectors. The Government is committed to taking forward a whole range of public private partnerships. That will of course include PFI but not to the exclusion of other forms of partnership. We are committed to making PFI work even better. But not all of our eggs will not necessarily be in the PFI basket. Again for us what counts is what works.”