This article explores the recently revealed shortfall in the Private Finance Initiative and Private Finance Initiative 2 (PFI 2). Public funds are now required to make up for private capital that has fallen through for three large investment projects, each worth between £1bn and £2bn. PFI the country’s first attempt at establishing private sector financing for major infrastructure projects was labeled an “accounting wheeze with ‘perverse incentives’” with major problems, it was rebranded as PF2 with a whole new set of regulations and a revised process. It was expected that PFI 2 would be able to leverage private financing for public infrastructure projects, however that private money has yet to materialize leaving a gap in the planned budgets. For example, in March 2013 the government had to announce that an intended £1bn public-private partnership to finance the rolling stock for the Crossrail project running through central London would now be a publicly footed bill. Article covers similar developments in education infrastructure. This has left many unhappy as the total cost to the public finances of plugging gaps in private finance is still unknown.
