Surely it's time to sound the death knell for the private finance initiative...
An ill-conceived idea that allowed big contractors and banks to get rich on the back of the taxpayer...
The government's justification for PFI was that it allowed them to borrow more money for public projects and put schools and hospitals 'off-balance sheet'.
Well now that notion has been shot down in flames: http://news.bbc.co.uk/1/hi/uk_politics/7891475.stm
Perhaps the powers-that-be will finally come to their senses now they're having to bail out the monster they created.
Is this the same PFI that has led to over £100bn of construction spend in the past 10 years?
The same PFI that delivers 75% of projects on time and to budget, compared to just 25% of projects procured the 'good old' traditional way (source: National Audit Office).
Should we be biting the hand that feeds us?
Fred20:Is this the same PFI that has led to over £100bn of construction spend in the past 10 years?
No, it isn't the same PFI.
Perhaps the government should fund PFIs via the nationalised banks.
More PFI news - just tweeted by @ContractJournal!
11:56 24 Feb 2009 By John Leitch
The government is expected to provide bridging loans running to a total of £4bn to keep planned PFI projects on track.
The Financial Times reports on a PFI tally of 800 deals having been signed off to date already, with a capital value of £68bn but with public sector commitments to pay a total that will rise to £215bn 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.
“Today the party might not be over for the private finance initiative,” says the FT. “But it is far less champagne-fuelled than it was.
“By 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.”
Hence the pressure on the government to step in. Philip Hammond, treasury spokesman for the Conservatives says it is “ridiculous to take the “private finance” out of PFI as “you haven’t got much left”. Convolutions in the finance market have already had the effect of transferring the private sector’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 – 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 – 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. “The financial model is already dramatically different to what was bid by the three final bidders because of the strong desire to get it going,” he said. “The delay has become a political embarrassment. “Not only that, but the scope has changed, the work package is very different – some widening is no longer required as they have switched to ATM as the alternative answer.”
Hence the pressure on the government to step in.
Philip Hammond, treasury spokesman for the Conservatives says it is “ridiculous to take the “private finance” out of PFI as “you haven’t got much left”.
Convolutions in the finance market have already had the effect of transferring the private sector’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 – 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 – 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.
“The financial model is already dramatically different to what was bid by the three final bidders because of the strong desire to get it going,” he said. “The delay has become a political embarrassment.
“Not only that, but the scope has changed, the work package is very different – some widening is no longer required as they have switched to ATM as the alternative answer.”