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Contractors question optimism over PFI funding

Contractors have cast doubt on a senior civil servant’s claim that the Government is “on top of” the PFI issues that have blighted the construction industry during the downturn.

Deputy director of the Schools Capital and Building Division at the Department for Children, Schools and Families Sally Brooks last week claimed: “We are pretty much on top of PFI issues. PFI projects will pretty much be going ahead.”

Raising private finance for big projects has been a major stumbling block for contractors seeking public sector work during the downturn. Almost £1 billion of education work went on hold in 2008, with the Building Schools for the Future scheme hit particularly hard.

Salford City Council last week admitted funding difficulties were partly to blame for further delays announcing its winning bidder. Contenders Lend Lease and Hochtief/Laing O’Rourke will now have to wait until May to find out who has won the £180 million job.

But Ms Brooks insisted that 15 banks were now in talks about BSF projects, and suggested that the Government’s action over PFI – including agreeing to step in with £2 billion to kickstart projects – had restored confidence.

Vinci Education managing director Andrew Percival said: “Is anything in the financial market sorted?

“There is no doubt that it still remains a condition that needs to be resolved within each bid, knowing the unique parameters of that job.”

Balfour Beatty business development director Ian Woosey added: “It is still a challenge. There is funding out there but it is not getting easier. Lenders are driving hard terms.”

However, he insisted: “We are still approaching BSF on the same basis as before.”

Partnerships for Schools is understood to be close to securing more funding from the European Investment Bank.

A PfS spokeswoman said: “We now have secured a funding commitment of £300 million from the European Investment Bank, and are continuing dialogue with them about the possibility of further funding being made available for BSF projects.”