Members of the European Council and European Parliament are to meet next month over a compromise text of a European directive that could otherwise outlaw the government's PFI programme.
Building revealed last week how the government's multibillion-pound programme to rebuild Britain's schools, hospitals and prisons is being threatened by a proposed European directive.

The worry is that the directive would severely restrict negotiations between a contractor and a client once the contractor had been named preferred bidder.

If the directive became law, that would make the current system for awarding PFI contracts unlawful. This would have a radical effect on capital investment in public services.

The Construction Confederation's European director, Sally Gibbins, said it was important that representatives from the European bodies agreed a compromise text in order for the PFI to progress.

She said that the directive would also have a wider implication for the selling of the PFI model by UK firms to European member states.

The Construction Confederation has held urgent talks with the government over the issue in the past month.

The government has acknowledged the confederation's concerns over the issue and is understood to be finalising a legal viewpoint of the situation.