The United Kingdom's Private Finance Initiative, one of the most established models for public-private partnerships, is facing an overhaul as policy-makers rethink the traditional parameters of project finance, procurement and management. The shift follows years of PFI use under the Labour Party when it was in power. Since the formation of the Conservative/Liberal Democrat government in 2010, Exchequer Chancellor George Osborne, a conservative, has raised concerns about "misuse of PFI," calling for a reassessment.
Government debt and tighter credit are behind the overhaul. The independent National Audit Office noted last April that the cost of debt finance rose during the recent credit crisis by up to 33%. A Parliament treasury committee said that paying off £1 billion in PFI debt would cost taxpayers the same as £1.7 billion in government debt.