Budget expansion plan for PFI

Treasury minister responds to industry's complaints, Peter Rodgers reports

The Chancellor is likely to announce a big expansion of the Private Finance Initiative in this month's Budget, including a drive to encourage local authorities to participate which could substantially boost the current pounds 5bn of projects in the pipeline or agreed.

Among new measures being considered by the Treasury to boost the PFI is a set of changes in the rules governing local authority capital investment which could bring new work to manufacturing and construction industry.

Michael Jack, the financial secretary to the Treasury, made clear yesterday that every department has been under strong pressure during the pre-Budget public spending round to come up with proposals for introducing private finance.

Under the PFI, private sector companies fund investments that would otherwise be financed by the taxpayer.

"If they [departments] want to be associated with things that are going to happen, private finance is the preferred route" Mr Jack said.

The proposals to make PFI finance more accessible to local authorities were drawn up by the Department of the Environment. Mr Jack, while refusing to give details, dropped a strong hint that the Treasury looked on them favourably. He described them as "very interesting ideas."

The PFI has been widely criticised in industry, particularly among construction companies, because of its slowness to get off the ground, amidst allegations that schemes have been bogged down in a mound of bureaucratic paper. Construction companies claim the PFI has been used as a cover for cuts in public works contracts. Mr Jack said the Treasury acknowledged the criticisms about how PFI projects were negotiated and wanted to hear industry's complaints and do something about them. "We are learning all the time," he said.

He has held bilateral meetings with spending ministries to identify potential logjams in Whitehall, and the Treasury has launched a big staff training programme. The aim is to bridge what is seen as a cultural divide between civil servants and the businesses with which they negotiate."It takes time for a partnership to form," Mr Jack said.

A new Treasury assessment to be published in the next few weeks will show that the pounds 500m of PFI projects committed at the end of March has grown to pounds 1.3bn, including the pounds 140m contracts for two privately funded prisons that are about to be announced by the Home Office.

Officials said a further pounds 400m of roadbuilding projects are also near signature, which will take the total to pounds 1.7bn.

In the last Budget the Chancellor set a target of pounds 5bn of PFI projects by the end of the current financial year, including pounds 2.3bn for the proposed Channel Tunnel rail link. Mr Jack said he was confident that the link would be agreed during the financial year. That would bring the total to pounds 4bn - leaving only pounds 1bn to go to meet the Chancellor's target.

It is thought that the Treasury is looking for a further pounds 5bn of PFI projects by the end of the 1995/6 financial year. With the rail link regarded as very much a one-off, that represents almost a doubling of the flow of smaller PFI projects. But Mr Jack expressed confidence in Whitehall's ability to come up with new and viable plans, despite industry's misgivings about the pace of the programme.

Start your day with The Independent, sign up for daily news emails
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific