£13bn 'bailout' for PFI schemes

The government has announced that it will lend money to companies involved in a range of private finance initiative schemes.

Chief secretary to the Treasury Yvette Cooper said the move would support £13bn of public investment.

In a written statement, she said "current financial market conditions" threatened to disrupt planned projects.

"This protection will assure the future of a broad range of public infrastructure projects including £3.5bn of waste treatment and environmental projects, £3.1bn of transport projects and £2.4bn of schools projects," said Cooper.

"It will also avoid the significant delays which would be entailed by switching these projects to alternative procurement approaches.

"These projects can therefore go ahead swiftly and support jobs and the economy and help prepare the country for the future recovery."

Around 110 PFI projects with an estimated capital value of £13bn are proceeding but have not yet reached final financial agreement.

These include projects such as the M25 widening, North Bristol NHS Trust Southmead hospital redevelopment, Bradford school redevelopment, the Victoria Hospital in Fife and Croydon and Lewisham street lighting.

The Treasury said that exact funding requirements for each scheme will be determined by market conditions, but that it stood ready to provide additional resources funded through further borrowing.

"The government believes it is vital to get these infrastructure projects under way as swiftly as possible – to support jobs and the economy this year as well as delivering important public services," said Cooper.

"Switching to alternative procurement methods or conventional funding and for these projects at this late stage would incur significant additional delays or risk projects failing.

"For that reason we have decided that providing additional debt finance is the most effective way to get construction underway swiftly and support the economy."

But Unison general secretary Dave Prentis said public money was being used to "bail out failures in the private sector with no return".

"Bailing out PFI now is just throwing good money after bad," he insisted.

"Now that private finance has dried up, it is high time to make a clean break with PFI, end the vast profits these companies make at the expense of the taxpayer and return to publicly run, publicly funded schemes."