A row is looming in Whitehall over a planned shake-up of the government's private finance initiative, according to ...
A row is looming in Whitehall over a planned shake-up of the government's private finance initiative, according to the Financial Mail on Sunday (p5). City banks and investors are also worried about a proposed state venture-capital bank to help fund PFI projects such as schools, hospitals and transport projects.
The bank is set to become the main recommendation in a review of the PFI by Pearl Assurance chairman Malcolm Bates. The ministry of defence and the department of health are thought to have the deepest anxieties, but other departments with bug PFI programmes are also worried. They see it as an attempt by the treasury to strengthen its grip on their spending plans. A source said:'They see it as a Treasury bank and an attempt by the treasury to extend its influence to new areas'.
The PFI has taken more than seven years to emerge as a serious policy because of financial and legal difficulties in putting togther complicated deals. Now the City sees the state bank as undermining the aims of PFI as well as its position in it. A PFI banker said: 'This defeats the whole point of the exercise. The government will have to find money for this bank and I thought that using taxpayers' cash was what it did not want to do'.