Schemes funded through the controversial private finance initiative (PFI) are to be bailed out using billions of pounds of taxpayers` money, it has been announced.
The move is to ensure £13bn of public investment in infrastructure projects is protected after the schemes struggled to get credit due to the financial crisis.
The treasury is to set up a new unit, run as a private limited company and acting as a co-lender with the banks, to offer loans at commercial rates to PFI projects that cannot raise sufficient debt finance on “acceptable terms”.
Officials from the Treasury suggested up to £2bn could be lent in this way over the coming financial year – with the loans structured so that they could be sold on to the markets as they recovered.
Treasury chief secretary Yvette Cooper said that the private sector would continue to bear the risks of cost overruns and delays.
“The government believes it is vital to get these infrastructure projects under way as swiftly as possible – to support jobs and the economy this year as well as delivering important public services,” she said.
Copyright © Press Association 2009
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