Post-Contractual Lock-in and the UK Private Finance Initiative (PFI): the Cases of National Savings and Investments and the Lord Chancellor's Department
Article first published online: 17 MAR 2005
Volume 83, Issue 1, pages 67–88, March 2005
How to Cite
Lonsdale, C. (2005), Post-Contractual Lock-in and the UK Private Finance Initiative (PFI): the Cases of National Savings and Investments and the Lord Chancellor's Department. Public Administration, 83: 67–88. doi: 10.1111/j.0033-3298.2005.00438.x
- Issue published online: 17 MAR 2005
- Article first published online: 17 MAR 2005
- Date received 14 August 2003. Date accepted 9 June 2004.
According to the UK government, one of the key features of the Private Finance Initiative (PFI) is the scope it provides to transfer risk to private sector suppliers. Under the PFI, public bodies are expected to develop interdependent relationships with suppliers that allow risk to be transferred. However, it is the argument of the author that it will not always be possible for interdependent relationships to be engineered by public bodies – on many occasions, public bodies will find themselves asymmetrically locked-in to their supplier. This situation leads to private sector suppliers becoming dominant in those relationships which, in turn, will allow them to pass back risk and obtain greater returns. As a result, the author argues that it is not a question of whether risk can be transferred under the PFI, but when. This argument is illustrated by use of the contracts managed by the UK National Savings and Investments and the UK Lord Chancellor's Department.