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PFI schools on horizon as government prepares to outline initiative's future

The first batch of schools to be procured under the private finance initiative will go to market “around the end of this year” while a wider announcement on the PFI model will be made in the autumn statement in December.

It comes as research shared exclusively with CN shows that commitment to a new model could open the gates to £24 billion of projects, following a 90 per cent fall in PFI work in two years.

Research by construction business intelligence unit Glenigan shows just nine schemes worth £845 million have started this year, compared with 120 schemes worth £11.1bn in 2009. 

It also shows that three schemes worth £740m have been put on hold this year.

Click on graph to enlarge

PFI projects started and planned by value and number

CN has learned that the new PFI model will be outlined in the autumn statement on 5 December, though sources close to the Treasury are also suggesting that officials are trying to get an announcement cleared by ministers for the end of October.

Meanwhile, the Education Funding Agency has dismissed suggestions the government is looking at using an alternative to PFI on the £2bn Priority Schools Building Programme to speed up the build process. 

An EFA spokesperson said: “The first privately financed batch of schemes as part of the PSPB will go to market around the year end.

“We are working with the Treasury on how the contracts will be structured, and in discussion with private finance providers to explore the best way for them to engage with the programme.”

“The first privately financed batch of schemes as part of the PSPB will go to market around the year end.”

Education Funding Agency

Research by Glenigan shows 37 PFI project starts in 2011 to the value of just £1.28bn, down from 42 projects worth £2.5bn in 2010.

Infrastructure UK, the Treasury department in charge of reducing the cost of UK infrastructure, launched a PFI “call for evidence” at the end of 2011.

Glenigan economics director Allan Wilén said local authority schemes have accounted for the lion’s share of PFI projects in the last 12 months, including street lighting, energy to waste and previously approved Building Schools for the Future schools, with the biggest being the £570 million extension to the Nottingham Tram network.

He said: “We have identified £24bn of projects scheduled to start over the next three years. However, the prompt resolution of the current PFI review is required if these projects are to progress to timetables.”

Glenigan says a number of councils are looking to take forward significant regeneration projects, including commercial and residential led schemes. It said there is £7 billion of planned waste and renewable energy projects. 

Mr Wilen said the data includes a spectrum of schemes from the pre-planning stage.

The Treasury has published a £5.4 billion PFI procurement pipeline, and said it is “not aware of any projects that have stalled because of the review of PFI”.

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