… If PFI Projects are to Proceed in the UK.
As reported in an earlier paper (see August and November 2008 blogs), many building projects under the Private Finance Initiative (PFI) in the UK, in which the private sector and their bankers develop and fund major infrastructure projects and are repaid over a 
period of time, typically 25 years, have been held up or cancelled because of the credit crisis and, some believe, government inertia.
PFI projects worth hundreds of million pounds for the development of roads, waste plants and defence projects have been stalled, largely because of the lack of project finance available. The credit problem has also affected Government high priorities, especially hospitals and schools. More than 100 schools, colleges and hospitals with an estimated development cost of £2.3 billion (EUR 2.2 bn) are believed to be effected by the lack of funding.
The slowdown in PFI development is occurring at a time when Gordon Brown and his Government are promising a boost to the UK economy through public sector spending but the Treasury has announced that the £3 billion (EUR 2.8 bn) fiscal stimulus package announced in the Pre – Budget report was destined for smaller non-PFI schemes, such as refurbishing council homes, providing small surgeries and carrying out remedial work on schools. At the same time, the Treasury said it was ‘committed’ to £21 Billion of PFI projects. Clearly, as Chris Wilson, Chairman of the 4Ps, which tracks public private projects, has pointed out, “too many projects are chasing too little money”.
Therefore, without a further repair to the banking system, it is unlikely that many of the ‘committed’ PFI projects will proceed . David Metter, Chairman of PPP Forum, which represents the PFI industry, has noted that “the Government is trying to fix the banking industry rather than these projects. But if the current market conditions continue, there will have to be more support”.
