Collapse in PFI deals signed - only 34 last year

Only 34 PFI deals were signed last year which was well below the figure of more than 60 in each and every year of the past decade, in fact since the procurement model first saw the light of day.

The credit crunch is the main reason for the downturn.

Today’s Financial Times reports seven hospital deals in 2008 compared with 20 in the previous year.

Waste management PFI deals were down to just three.

“Economic conditions mean big schemes such as the M25 widening, the M80 in Scotland and Britain’s biggest waste management project in Greater Manchester are struggling to raise the money needed,” says the FT.

As a result, some voices claim that further government guarantees – or public sector funding – will be needed.

The figures surface at the same time as the National Audit Office warned yesterday that both central and local government risks being hit by huge European Union fines for failing to reduce landfill “if a string of PFI waste management schemes were not signed soon” notes the FT piece.

The NAO reckons that the fines “could run into several hundred millions of pounds”.

Also the NAO is quoted as saying that projects currently in procurement “face difficulties in obtaining private finance”.

Greater Manchester Waste Disposal Authority has already agreed to cough up an extra £70m of its own to keep the wheels on its £600m waste scheme.

There are fears that the M25 deal still needs a similar top-up and has yet to find a willing hand.

The FT reports Tim Byles, chief executive of Partnerships for School as saying that “half a dozen or so banks are returning to the big schools market, although they are limiting the amount each would lend on any given project”.

Byles said that deals are still being done, although the Building Schools for the Future project is still “not out of the wood yet” despite a pledge of £300m from the European Investment Bank and the arrival of the insurer Norwich Union, a new player in the school PFI sector.