The government will not be seeking a ‘like for like’ replacement of the private finance initiative (PFI), according to a new document published to tie in with today’s Spring Statement.
In last autumn’s Budget, Phillip Hammond announced that the government would no longer use the PFI or its successor scheme PF2.
In his statement issued earlier today, the chancellor of the exchequer revealed that the Treasury is embarking on a review of future arrangements for attracting private finance into infrastructure.
The exercise is designed to plug the gap left both by the abandonment of PFI and the UK’s withdrawal from the EU, meaning that infrastructure projects will struggle to access loans from the European Investment Bank, which has been an important source of funding for such schemes.
The document, entitled the ‘Infrastructure Finance Review’, says the government is not seeking a ‘like-for-like replacement’ for either PFI or PF2.
And it says there will be no further procurement of off-balance sheet projects using the traditional PFI Design, Build, Finance and Maintain contracting structure whereby the taxpayer indirectly forks out for projects’ construction bills by paying for their running costs.
The review seeks views on the tools that the government can use to encourage private investment in infrastructure and whether a new financing body should be set up to replace the EIB.
This review will inform both the pan government Spending Review and the National Infrastructure Strategy, both of which are due to be published later this year.
The exercise is being led by HM Treasury, which is working with the Infrastructure and Projects Authority, with the support of an expert panel.