‘Son of PFI’ system may be put on hold

The future of PFI will be decided by an in-depth review to be launched by the Treasury before the end of the year.

The development - which effectively puts the much-heralded ‘Son of PFI’ procurement system on ice - will be a “well-considered evaluation of the alternatives” to PFI, according to a source close to government.

The review will be launched following the government’s response this week to the findings of the Treasury Select Committee which published a report on PFI in August calling it “extremely inefficient”.

Director of the UK Contractors Group (UKCG) Stephen Ratcliffe said many in the industry would be dismayed that another major part of its work was being placed under review.
But he added that on balance, the review could well be a positive move and could lead directly to a ‘Son of PFI’ announcement.

He said: “In one sense, it is good news because it seems that the Treasury is looking at this in a positive way and looking at what will replace PFI rather than just having ministers slagging it off.

“The industry will be concerned about next year and beyond because so much is under review at the moment. The UKCG will certainly want to take part in this review… we need some clearer signals from the Treasury as to which areas [of the industry] they want developed.”

Head of construction at KPMG Richard Threlfall said ministers should opt for a “short sharp process” which drew a line under some of the controversies raging around PFI.

“This is good news if it buries the hatchet over these issues,” he said. “It needs to quell some of the more misinformed debate going around Westminster.

“It needs to be honest about PFI’s shortcomings but also [admit that] in a world where government has no money, it is a pretty good way to get things built.

“The country cannot afford dithering around this. All the benefits of PFI have been forgotton - it has allowed a phenomenal upgrade of the nation’s infrastructure.”

Building understands that the Treasury has yet to decide on the scope of the review and on whether it will be an internal process or a more wide ranging consultation.