Engineers have this week urged government to stop procrastinating over the future of private finance and commit to a model that will give investors confidence to back infrastructure schemes.
It is now six months since the Treasury announced its intention to reform PFI and three months since its public consultation closed in February. Yet no date has been set for a decision on what a future funding model might be.
The Association for Consultancy and Engineering (ACE) this week attempted to drive some impetus into the process, publishing proposals for five new Public Private Finance Models (PPFMs) that could replace PFI for government infrastructure projects.
The ACE said its new models would allow government departments, or a centralised body of expertise, to use alternative means of securing private finance that meet specific aims for a particular project.
It believes this would help restore PFI’s damaged reputation, particularly over whether it has delivered value for money.
Where a project is likely to generate significant additional private growth in the surrounding area, finance might be secured against the resulting increase in business rates in the area. Alternatively, to widen the pool of investors to more risk-averse institutions, finance for a project could be split according to different aspects of the project.
“We know that government is keen to see delivery of the National Infrastructure Plan to drive growth through the UK economy. However, the public needs to be convinced that government can do this in ways that secure value for money and does not expose the taxpayer to undue risk,” said ACE chairman Paul Hamer.
“With that in mind it is sensible to develop a range of PPFMs such that any given project can adopt the most suitable model for its needs.”
Industry leaders said government needed to act fast to restore confidence among investors that the UK is a place to invest. “We are not getting much of an incentive from government for private money,” said URS vice president Hugh Blackwood. “We are still waiting for the son of PFI. We don’t have a plan.”