A TOUGH START FOR A U.K. INITIATIVE

The Private Finance Initiative (PFI) of the United Kingdom was established as a means of shifting public-sector projects into the private sector. With its origins in the Thatcher era, the PFI was initially impressive, revealing significant cost savings from privatization efforts. Program expansion, however, was too ambitious and many private contractors complained. The private sector believed they were being micromanaged by the public sector and they felt that the public sector was trying to transfer unacceptable risk. This article outlines the problems currently plaguing the PFI and some of the steps that might resolve the problems. PFI advocates continue to support privatization efforts, though, stating that they want people to automatically consider the private sector for infrastructure projects.