PFI revamp to involve 'only minor changes'

The government’s long-awaited review of PFI, due this autumn, is expected to produce a remodelled version of the scheme that includes only minor changes.

According to a report in the Financial Times, an announcement on PFI is expected at the end of October, with details of the schemes to be fast-tracked under the revamped PFI due announced in the autumn statement on December 5.

The FT said that changes to the scheme would include stripping out services such as cleaning, catering and security from the 25 to 30-year contracts in a bid to keep a tighter control on costs.

It said that in a plan still being discussed with industry, the government was also considering investing a small amount of public capital into PFI projects, to ensure the government had a seat on the board of any project, raising corporate governance standards and easing fears that the schemes are in the hands of private financiers.

But the FT said the main elements of the new PFI projects would likely remain the same, with the private sector still entering into long-term deals to design and build roads, hospitals and schools, with essential maintenance such as roofing included in the contracts.

The FT said the projects would continue to be financed by private debt and equity paid for by a revenue stream from government rather than users.

Schemes will in many cases continue to be off the public sector’s balance sheet, the FT said.