Table 3.2 sets out a summary of PFI projects since 1987 (the British government has backdated PFI to 1987 for this purpose, but excluded the Channel Tunnel), listing separately the projects with a capital value of more than £100 million. As can be seen, a total of 725 projects have been signed, with a total capital value of £47.5 billion (as of mid-2006 some 500 of these were in operation). The PFI programme is thus remarkable for both volume and numbers of projects. Although some very major projects rather distort the figures, especially those relating to London Underground (see the note below Table 3.2), the large number of smaller projects is also notable.
Table 3.3 sets out the same figures arranged by sector. The PFI programme began pri- marily with transportation-related projects, but while these remain important, the social infrastructure areas of hospitals and education, as well as defence-related projects, now form the other main legs of PFI, with social infrastructure producing the largest number of individual projects. (Typically schools projects are on a ‘group’ basis, involving the con- struction or refurbishment of a number of schools for the same Public Authority, which means that the numbers of individual school projects are much higher than the sector total of 144). The large number of individual projects of a comparatively small average size is a notable characteristic of the PFI programme. Other countries which have large PPP pro- grammes, such as Spain and Korea, have larger average project sizes, and hence fewer individual projects.
§3.4 United Kingdom 35
Table 3.2 PFI projects, 1987–2005
Year signed No. Value (million) Of which: over £100 million
1987 1 £180 Dartford River Crossing (180)—N.B.: does not include the Channel Tunnel (4,900, but the outcome was around double this figure)
1988 1989
1990 2 £336 Second Severn Crossing (331)
1991 2 £6
1992 5 £519 M6 Toll Road (485)—N.B.: did not begin construction until 2002
1993 1 £2
1994 2 £11
1995 11 £667 London Underground Northern Line Trains (409);
Birmingham Metro (145)
1996 38 £1,699 A1(M) Road (128); A1-M1 Link (214); Docklands Light Railway—Lewisham Extension (202); Croydon Tramlink (205); Northern Ireland Road Services (139)—N.B.: does not include Channel Tunnel Rail Link (5,200)
1997 59 £2,474 Manchester Metrolink (160); King’s College Hospital (142); Ministry of Defence helicopter training (114);
Armed Forces Personnel Administration Agency (264) 1998 86 £2,769 London Underground power supply (134) and ticketing
(160); hospitals in Norwich (158), Bromley (188), Lanarkshire (100), and Edinburgh (180); Dept. of Employment—IT (217); Inland Revenue offices (164);
Attack Helicopter Training (165); A55 road (100) 1999 87 £2,538 Guildford waste management (103); London Underground
radio network (468); hospitals in Swindon (100) and South Tees (122); Almond Valley waste water (100)
2000 105 £3,898 A13 Thames Gateway (411); Nottingham light rail (172);
University College Hospital (422); Glasgow schools (225); GCHQ (330); Ministry of Defence Main Building (345); Treasury Building (141)
2001 86 £2,237 Dudley Hospital (137); Inland Revenue/Customs &
Excise offices (220)
2002 71 £7,733 East London waste (102); London Underground—
Jubilee, Northern & Piccadilly lines (5,484); Coventry Hospital (379); Home Office offices (197); Ministry of Defence Strategic Sealift (175)
2003 57 £14,872 Customs & Excise IT (156); East Sussex waste (145);
London Underground—Bakerloo, Central & Victoria lines (4,597) & sub-surface lines (6,180); A1 Darrington—
Dishforth (245); Docklands Light Railway—City Airport extension (165); hospitals in Blackburn (104) South
(Continued)
§3.4 United Kingdom 37
Table 3.3
PFI projects by government department, 1987–2005
Capital value (million)
Government department No. Total Average
Transport 51 £21,956 £431
Health 149 £6,572 £44
Defence 55 £4,570 £83
Education 144 £4,112 £29
Scotland (regional government)* 91 £2,745 £30
Work & Pensions 11 £1,341 £122
Other (below £1,000 million per department) 243 £6,355 £26
Total 747 £47,561 £64
* Mainly for education, health and transport projects.
Source: As for Table 3.2
Table 3.2 (Continued)
Year signed No. Value (million) Of which: over £100 million
Derbyshire (312) and Oxford (134); Northern Ireland primary schools (104); Ministry of Defence water &
waste water (154); Skynet satellites (1,079)
2004 74 £4,021 Ministry of Defence water & waste water—2nd phase (174); Portsmouth highway maintenance (121); hospitals in Barking (238) Leeds (265) and Manchester (512);
Colchester army garrison (533)
2005 51 £3,567 National Roads Telecommunications Services (237);
Docklands Light Railway—Woolwich extension (177);
schools in Nottingham (131), Northampton (192), North Lanarkshire (138) and Renfrewshire (110); hospitals in Newcastle (238) Nottinghamshire (326) and Portsmouth (193); Oxford Radcliffe Hospital—cancer centre (123);
Leeds public housing (113); Ministry of Defence ‘C’
vehicles (114)
Total 725 £47,561
NB:* The figures for the cost of the 2002–3 London Underground projects take into account long-term investment over many years, much of which is not priced (costs will be fixed by an independent arbritrator), or funded: for example the 2002 project is shown above as having a capital value of £5.5 billion, but the amount of debt raised for the project was only £2 billion. Hence these figures are really not comparable with the others in Table 3.1, and rather distort the overall picture.
Source: HM Treasury—PFI Signed Projects List
A large proportion of PFI projects are in fact carried out by local authorities (municipal- ities, counties, etc.), but most of the funding for Service Fees is provided by central govern- ment. This funding is known as ‘PFI Credits’, and normally covers most of the capital-cost element of the Service Fees, leaving local authorities to fund the opex element from their normal revenues (on the grounds that they would have to fund these costs anyway even without new Facilities). Hence the central government controls the PFI programme, which is why projects are listed in Table 3.3 by central-government department. This high level of centralisation differs from the PPP programmes of some of the other countries discussed below, and has probably been a major factor in PFI’s rapid expansion in the social infra- structure field.
However, rather confusingly, PPPs undertaken by local authorities using their normal revenues rather than relying on PFI Credits, e.g.in the waste-processing sector, are not counted as PFI projects and therefore do not appear in these figures. Technically speaking such projects are not subject to direct Treasury control as PFI projects are, which is a weakness as they may not benefit from central-government expertise.
Another notable feature of the British PFI programme is that the earliest projects used the Concession Model but this has now entirely disappeared. All PPP projects in recent years have used the PFI Model, and even in these cases transfer of usage risk has also largely disappeared—i.e.virtually all PPP Contracts are Availability-based. This differs from most of the other countries discussed in this chapter, where Concessions form a sig- nificant part, often the largest part, of the PPP programme. This is partly a consequence of the difficulty of creating new toll roads in Britain, where there is little space for road-build- ing, and partly the result of the much wider use of PPPs for social infrastructure, where usage-based payments are difficult to apply.
While many public services have thus now come within the scope of PFI, the British Treasury has also restricted its use in some cases in the light of experience—PPPs for smaller Facilities (below £20 million of capex) and for IT projects (cf.§2.12) are now dis- couraged. Similarly, the inclusion of ancillary services (such as cleaning, catering or secu- rity) within the scope of a PPP Contract is now also discouraged (cf. §13.2).