The chancellor concentrated on ideology, but the main justification for PFI now is pragmatic. As our vox pop shows (page 17), the condition of public services is deteriorating at the same rate as the health of the public finances. But with warnings that taxes may have to rise by £11bn, the Treasury can't afford a single school or hospital without private help. Indeed, so parlous is UK plc's balance sheet that Brown is to extend the PFI into areas such as urban regeneration, which may come to the aid of the Thames Gateway (see news and Steve Norris on page 33).
The other message from Brown's speech is that the PFI is under Treasury control. This won't fill contractors with confidence, bearing in mind that department's established hostility to the accumulating weight of long-term repayments. But the switch from the Office of Government Commerce to the Treasury (see news) confirms that the politics have changed.
No doubt the arguments will continue to rumble about the PFI's efficacy. As Clive Porter argues (page 52), the prototype projects that the Audit Commission examined in its recent report on PFI schools aren't a good guide to the initiative as a whole. As he says, the case will only be proven once buildings have been in use for some years. In that sense, the commission was at once premature and out of date. More clear are the construction benefits, as the National Audit Office has just made plain (see news). Less than one-quarter of PFI projects finished late or overbudget – compared with three-quarters procured by traditional means.
As the self-appointed PFI tsar, Brown has many questions to resolve, not least the deterrent effect of tender and insurance costs. He may be helped by the dip in the commercial and industrial sectors – contractors only got into the PFI because there was so little work around in the early 1990s. But we still need better trained officials, sharper briefs, standard documents, fewer rounds of bidding and less design investment early on. Ideas such as a competition for model school layouts are the right way forward. One way or another, the politicking must result in bricks and mortar before the next election, otherwise the impetus Brown has just given the PFI will wane. Then, who knows? Having crossed one Rubicon this week, maybe the chancellor will traverse another and extend the PFI to the educational and medical services. Now, that sounds like privatisation. One suspects Brown will have an explanation – just don't expect to understand it.
Adrian Barrick, editor