Pump-Priming the PFI: Why are Privately Financed Hospital Schemes Being Subsidized?

The authors explain how the Private Finance Initiative (PFI) has raised the costs of infrastructure development in the health service. They demonstrate that the assumption that higher capital costs would be offset by savings resulting from the involvement of the private sector is wrong—rather, NHS trusts and health authorities have been obliged to make savings on other budgets in order to make the high costs of investment affordable. There is no reason to believe that these problems will disappear as the volume of PFI investment increases.