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Brown: Treasury to intervene in PFI shortfalls

The Prime Minister yesterday confirmed that the Treasury would intervene to bring key PFI deals to financial close, such as the £5bn M25 DBFO.

Under questioning by the House Liaison Committee yesterday, Brown responded to a question by chairman of the influential Public Accounts Committee, Edward Leigh.

"You are going to rely very much on the private sector as you boost investment. How are you going to ensure that projects like PFI do not suffer with a lack of private capital investment or that the burden falls on the taxpayer as they pull out?" he asked the Prime Minister.

In response, Gordon Brown said: "We have been looking, obviously, at the Private Finance Initiative and we have been looking at it in relation to the problems that private investors have.

"Many projects are still going ahead as planned, I just have to say to you, and many of the projects that we are looking at we believe we can find a way forward for, and I think you will find that the Treasury will announce what it plans to do in the next few days."

In a further question, relating to the financial close for the Building Schools for the Future (BSF) programme, Barry Sheerman asked: "There were some real concerns that there were some serious difficulties with gaining the finance because a lot of that finance was coming from overseas. I know you cannot give too much away but are you confident that we can meet that demand for finance in these PFI contracts?"

In reply, Mr Brown said BSF PFI deals had been successful at reaching financial close to date, but: "people obviously will be worried that their financial backer on the private side may not be available, the record at the moment is that we are bringing these projects to a conclusion, but where there are difficulties in terms of private finance I believe the Treasury is about to bring forward proposals."

PFI bidding for the £5bn M25 DBFO was due to close towards the end of 2009, but the Connect Plus consortium comprising Balfour Beatty, Skanska, Atkins and Egis Projects revised the deadline to 'early 2009'.

The Highways Agency has previously announced that government co-funding is "under consideration", and that an April start may be delayed.

Today a Highways Agency spokesperson said: "The M25 DBFO contract is not on hold. We remain confident of a successful outcome, and start of work on widening the M25 is still programmed for Spring 2009.

"Connect Plus, our preferred bidder, is in constructive and regular dialogue with the potential funding banks and we know they are keen to participate. Our aim is to see this stage of the project to a successful conclusion as soon as we can.

"We started advance clearance work in December to ensure we meet the start of works date," she said.

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