Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

ACE calls for five replacements for PFI model

The under-fire PFI model should be scrapped and replaced with five alternatives, the Association for Consultancy and Engineering
has said.

An ACE report titled Public Private Finance Models, published yesterday, said one model would combine Tax Increment Financing - which uses anticipated tax rises to fund investment projects - with parts of the PFI model.

ACE chairman and chief executive of WYG consultancy Paul Hamer (pictured) said financing the National Infrastructure Plan had to avoid exposing taxpayers to undue risk.

“It is sensible to develop a range of [models] so that any given project can adopt the most suitable model for its needs,” he said.

The document considers the potential for using government equity within PFI projects.

ACE said the structural and cultural change needed to raise pension fund investment in infrastructure made this a longer-term solution.

But by raising its equity stakes, the government could provide “confidence and trustworthiness” in projects, while improving their credit rating and financing options.

Risk would be pooled by grouping projects and sectors or pooling finance so that smaller investors could invest in the work.

Another model would involve staggering finance, granting investors access based on the stage of project development and risk.

A Treasury spokesperson said: “The government is considering a range of models and options for reform as part of its fundamental review of private finance.

“We have already taken action to drive savings and aim to deliver a new model, which is cheaper, accesses a wider range of financing sources and strikes a better balance of risk between the private and the public sectors. This will ensure a fair deal for the taxpayer now and in the longer term.”


Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Links may be included in your comments but HTML is not permitted.