The fear was raised at a private meeting of the Private Finance Providers Forum last week.
One source who attended the meeting said funders were worried that their slow progress in the first round of PFI hospital deals was being held against them. The funders claim the Treasury taskforce that advises government on PFI deals is telling departments to avoid banks it believes are unreliable.
The 40-strong group, which meets to discuss key issues in the PFI market, includes Tarmac, Sir Robert McAlpine, Laing and Taylor Woodrow, and banks ING Barings, ABN Amro, Royal Bank of Scotland, Schroders and Barclays Capital.
They believe the taskforce is alleging that some banks will do anything to get their consortium to preferred bidder stage on a project, and that they change their terms after securing a project.
However, bankers argue that they do not change their terms. They say they are unable to give cast-iron guarantees during the bid process, and that they only alter terms at a late stage when forced to by their credit approval committees.
There was speculation at the meeting that banks involved in a recently signed PFI hospital deal at Hereford are being discriminated against.
“The government sees some banks as backsliding, but this issue is only a symptom of the competitive process,” the source said.
Backsliding is only a symptom of the competitive process
Industry Source
“Of course, it is impossible to give guarantees before a deal is in the closing stages, because the full details of the financial package aren’t often known until then,” he added.
The meeting also heard concerns about the current dearth of major new PFI deals.
PFI providers want to see three or four £100m-200m deals coming to market every year rather than the current smattering of far smaller jobs.
The £7bn part-privatisation of London Underground is considered an attractive prospect. It will be advertised in the next few weeks, but funders believe it will take a long time to get off the ground.
The forum also discussed the delays to the publication of the Treasury review of the PFI, which has been conducted by Pearl Assurance chairman Sir Malcolm Bates. Submitted to ministers in March, Bates’ report recommended the creation of UK Capital, a government bank that would invest public money in and advise contractors and departments on PFI projects.
Bankers and contractors are strongly opposed to the concept, as they say there is already enough private sector cash available for PFI projects.
