The history of Private Finance Initiative in the UK – a timeline

Click on the image for an interactive version of the timeline
Click on the image for an interactive version of the timeline

 

Who introduced the Private Finance Initiative in the UK? What was the first public facility to be built under this funding model?

All these questions, and many others, are answered in a timeline that will guide you through the 23-year-long history of PFI in the UK.

Click here or on the image above to access the full interactive timeline with videos of speeches and original documents.

Alternatively, you can find the content of the timeline below in written form.

11 December 1992 – Private Finance Initiative (PFI) is born

Private Finance Initiative is introduced as a new procurement method by the Chancellor of the Exchequer, the Conservative MP Norman Lamont. In his Autumn Statement Lamont calls for “ways to increase the scope for private financing of capital projects”

October 1995  – Skye Bridge, the first PFI infrastructure, is opened

Skye Bridge, the first PFI-funded public infrastructure is opened. The bridge, which crosses over Loch Alsh in Scotland, had an initial estimated cost of around £15 million. In December 2004 it will have to be bought back from its private owners by the Scottish Executive for £27 million following a public outcry over expensive tolls

31 October 1996  – First PFI hospital opens in Scotland

Ferryfield House, a £32 million community hospital for the treatment of patients with dementia opens its doors in Edinburgh. It is the first of many NHS facilities to be provided through PFI.

1997  – New Labour takes power and expands PFI funding model

The newly-elected Labour government gives fresh impetus to the Private Finance Initiative. Two months after taking office the Health Minister Alan Milburn makes clear to public servants that PFI will be the only game in town. “When there is a limited amount of public-sector capital available, as there is,” he famously said, “it’s PFI or bust”.

July 1997 – Labour establishes PFI Taskforce

A Private Finance Initiative taskforce is created within the Treasury. Its aim is to provide central co-ordination for a large-scale roll-out of PFI. It will later be part-privitised, having its shares bought by some of the biggest players in the PFI industry.

May 1997 / June 2001  – PFI numbers under 1st Labour Government 

By the end of its first term in power New Labour has signed 210 PFI contracts with a total capital value of £11.6 bn

May 2003 – Gordon Brown touts EU expansion of PFI 

In a speech to the Confederation of British Industries (CBI) the Chancellor of the Exchequer Gordon Brown says the government will use its influence to extend the use of PFI to the European Union.

June 2001 / May 2005  – PFI numbers under 2nd Labour Government 

Between June 2001 and May 2005 206 PFI contracts with a total capital value of £12.7 bn were signed

18 July 2007 – Metronet faces administration

Metronet, the main contractor in a £30 billion scheme to upgrade the London Underground, goes into administration. A report by the National Audit Committee will find that Metronet’s collapse cost taxpayers between £170 million and £410 million seriously undermining the ‘risk transfer’ login of PFI.

11 November 2009 – George Osborne promises new PFI model

Shadow Chancellor George Osborne vows that a Conservative government will scrap “discredited” Private Finance Initiative and replace it with better alternative.

May 2005 / May 2010  – PFI numbers under 3rd Labour Government 

Between May 2005 and May 2010 227 PFI contracts have been signed with a total capital value of £24.8 bn.

June 2010 – NAO warning over cuts at PFI hospitals

A National Audit Office (NAO) report warns that NHS Trusts may be forced to cut patient care and staff numbers at PFI hospitals in order to save money.

September 2011 – PAC slams PFI funding model

The Public Accounts Committee (PAC) publishes a damning assessment of PFI. The report accuses government departments of hiding the full costs and benefits of PFI. It also reveals that tax revenues are being lost because of offshore arrangements by investors.

12 July 2012 – South London Healthcare NHS Trust put into administration

South London Healthcare NHS Trust goes into administration having run up debts in excess of £150 million. At the time it is spending 14% of its income on PFI repayments for the construction and maintenance of Queen Elizabeth and Princess Royal hospitals.

12 December 2012 – George Osborne launches PF2

In the Autumn Statement George Osborne unveils Private Finance 2 (PF2), his alternative model to the ‘discredited’ PFI. Promising to cut waste, inflexibility and lack of transparency, PF2 seeks to re-adjust the balance between the public and private sectors. Experts like Professor Mark Hallowell argue that PF2 is likely to make it more, rather than less, expensive to deliver public infrastructure.

October 2014 – First NHS Trust to buy out its PFI contract

Northumbria Healthcare Foundation Trust borrows £114m from local council to pay off the contractors that built Hexham General Hospital under a PFI contract. The initial cost of the hospital was £51 million but the price would have risen to £249.1 million by 2033 because of the terms of the deal.

March 2015 – First PF2 construction project goes underway

The first major schools building project to be funded under the PF2 model gets underway. Worth over £160 million, it will see the construction, and future maintenance, of 12 new schools in North East England

May 2010 / March 2014  – PFI numbers under the Coalition Government 

Between June 2010 and March 2014 74 PFI contracts have been signed with a total capital value of £6.8 bn

Do you feel we have missed a key milestone in PFI history?

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