The use of the Private Finance Initiative (PFI) to finance major infrastructure improvements in the United Kingdom continues to grow at an increasing rate. Since its launch in 1992 the capital value of deals signed in the UK are estimated to be in excess of #12bn, with the possibility of many more billions of pounds of deals near signature. Although PFI has been a welcome source of finance for the public sector the debate over its application and impact to finance projects remains evident. A case in point being the use of a Public-Private-Partnership (PPP) to fund and maintain London Underground's ailing network. London Underground Limited (LUL) has made good use of PFI as a source of much needed investment for projects that include Northern line trains, Prestige, Power, Connect and British Transport Police. However, LUL's investment needs were much greater than these five projects. In 1998, the Government resorted to a thirty-year PPP structure to fund improvements in the network. Since its launch this initiative has been openly debated on the public stage most noticeably between the Government and London's Mayor, with the private sector bidders conspicuous by their absence. This paper provides an overview of the structure of LUL's PPP, the principles on which it is based, the chronology of events since its launch and presents a discussion of some of the key issues openly debated by the key parties. For the covering abstract see ITRD E124693.
Abstract