The Financial Times reports on a PFI tally of 800 deals having been signed off to date already, with a capital value of ВЈ68bn but with public sector commitments to pay a total that will rise to ВЈ215bn over the years through to 2032 as a result of capital, maintenance and service provision.
But of late the flow has dried up as a result of funding issues.
вЂњToday the party might not be over for the private finance initiative,вЂќ says the FT. вЂњBut it is far less champagne-fuelled than it was.
вЂњBy the end of last year, the bond market to finance PFI deals had vanished; bank funding, likewise had dried up. Since December, some banks have returned to the market but there are fewer than there used to be.вЂќADVERTISEMENT
Hence the pressure on the government to step in.
Philip Hammond, treasury spokesman for the Conservatives says it is вЂњridiculous to take the вЂњprivate financeвЂќ out of PFI as вЂњyou havenвЂ™t got much leftвЂќ.
Convolutions in the finance market have already had the effect of transferring the private sectorвЂ™s risk back onto taxpayers as the biggest lenders to PFI in recent times have been the Bank of Scotland, Royal Bank of Scotland and Lloyds TSB вЂ“ and all three have crawled to government to be saved by taxpayers taking a large stake-holding in them.
John Tizard, director of the centre for public service partnerships at Birmingham University, thinks the outlook for public infrastructure is grim no matter which way the coin falls вЂ“ be the call for either private or public funding.
A source in the road sector said that politically the M25 widening PFI project has jumped up the agenda and will be kept moving at all costs.
вЂњThe financial model is already dramatically different to what was bid by the three final bidders because of the strong desire to get it going,вЂќ he said. вЂњThe delay has become a political embarrassment.
вЂњNot only that, but the scope has changed, the work package is very different вЂ“ some widening is no longer required as they have switched to ATM as the alternative answer.вЂќ
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