§ Earl Russellasked Her Majesty's Government:
Whether they will quantify the cost to public funds over five years of each £1,000 spent under the Private Finance Initiative.
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§ Lord Mackay of ArdbrecknishUnlike conventional capital procurement, payments under the Private Finance Initiative by the public sector represent charges for services delivered to agreed standards. Private Finance Initiative (PFI) is a decentralised initiative and expenditure to purchase services procured under PFI is the responsibility of individual departments.
§ Earl Russellasked Her Majesty's Government:
Whether the Private Finance Initiative is intended to be suitable for the financing of expenditure on items which do not generate income.
§ Lord Mackay of ArdbrecknishDeals under the Private Finance Initiative rely on a stream of income to remunerate the private sector partner provided he delivers a stream of services to pre-determined standards.
In the majority of cases the income is derived from the charges made to the government department or other public sector body contracting for the service. The core service remains free to the end user in such cases. In some instances, the cost to the public sector can be alleviated by exploiting the commercial potential for charging other users, where this accords with government policy.