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PFI buckles up for a turbulent ride

2005 REVIEW

THE PRIVATE Finance Initiative had a tough time this year, with several big hospitals falling by the wayside and debacles over delayed schools.

The Derriford and Whipps Cross hospitals were both cancelled and, even though the Government predicted financial close on 10 major PFI hospitals, only three have so far been signed off.

Mowlem still cannot say when it will finish several late-running schools in Exeter and one PFI school closed in Brighton after only attracting half the necessary pupils.

Meanwhile, contractors have been clammering for expenses on big schemes to be repaid.

Several firms have lost millions after bidding schemes which were then cancelled but the request received a firm 'no' from the Treasury.

Other problems have come about once the contract has been awarded. In July Sir Robert McAlpine admitted that a scheme to rebuild and refurbish hospitals in Dudley in the West Midlands had blown a £100 million hole in its accounts. The problem is believed to be due to diff icult ies get t ing access to sites.

Now contractors will not touch refurbishment PFI with a barge pole. And as the Government has found out, to get anyone to modernise its schools it has to use conventional funding.

That has prompted some major councils to try to shun PFI even for their new build. Just last month Liverpool City Council said it would be pressurising the Government to allow it to use conventional funding for its £500 million Building Schools for the Future programme.

PFI has endured a turbulent 12 months and 2006 isn't expected to be any easier.