What advantages does PFI have over Government/Treasury borrowing?
Whilst PFI has a higher interest rate, the financial risks of construction and the cost of maintenance are included in a PFI. This gives two main advantages over Treasury borrowing: Transfer of risk: if a building is constructed using PFI then as soon as the contract is signed both the price and the timescale for the building project are set. So in our case, if the new Royal took longer to build than agreed, or if there were cost overruns, then it would be the responsibility of the PFI consortium they would have to pay for any additional costs and deal with any time overruns and any costs associated with those. Maintenance: once a PFI building has been completed and handed over the maintenance and repair remains the responsibility of the PFI consortia. This means that for us we would not have to pay any maintenance or repair costs for 30 years as this would be built into the PFI arrangement.
