But Treasury chief secretary reiterates government's commitment to public-private partnership deals.
Government officials this week admitted publicly that public-private partnerships and PFI deals have been put on hold because of uncertainty caused by the collapse of Railtrack.

The disclosure was made at a conference in London entitled Delivering Successful PPPs, aimed at bolstering confidence in PFI.

Building revealed two weeks ago that bankers were refusing to sign off contracts nearing financial close because they wanted time to take on board the implications of Railtrack's demise. Sources claimed that the government's behaviour was likely to push up costs.

James Stewart, chief executive of Partnerships UK, the Treasury's own PPP venture, said: "We are experiencing a hiatus because of Railtrack – we cannot get away from that."

PUK was set up last year to help government departments handle PFI deals. Private companies, including Jarvis (which has a 2.2% stake) own 51% and the Treasury owns 49%.

Stewart claimed, however, that the government would soon be signing off PFI deals, as they fell into a separate category from Railtrack. He said: "Under the PFI, the rights of shareholders are clearly set out and guaranteed in the contracts."

We are experiencing a hiatus because of Railtrack

James Stewart, cheif executive, Partnerships UK

Stewart added that PPPs would continue to operate in the rail sector. He said the government wanted to hear from private companies that had ideas about how best to go forward.

Andrew Smith, chief secretary of the Treasury, was also adamant that the PFI would be unaffected by Railtrack. He said the privatisation of Railtrack had not been a PFI-style deal. He blamed the former Tory government for the collapse.

Smith said: "It was a very unusual privatisation. We weren't in a position to offer a blank cheque to Railtrack. But there are very clearly defined obligations in PPP deals."

He also used his keynote speech to reaffirm the government's commitment to PFI. He said the government had to get the best out of the private sector to improve public services because the public sector was unable to deliver complex and expensive capital projects.