Budget 2009 reconfirms Government commitment to PFI

28 April 2009

In the Budget published on 22 April 2009, the Government reconfirmed its commitment to PFI and its establishment of an infrastructure debt financing unit, to be called the Treasury Infrastructure Finance Unit (TIFU). The Government stated it has decided to move away from the Wave based model in relation to BSF and also stated it plans to commit more than £2 billion of PFI credits in the Waste sector.  

Commitment to PFI: "The Government  remains strongly supportive of the value that private finance can bring to infrastructure procurement."  The Government also shows there is a healthy pipeline of PFI deals, forecasting £11.7 billion of projects currently in procurement to reach preferred bidder by 2011. This information is included in the Budget supplementary material document; click here for a copy of the relevant pages.

Treasury Infrastructure Finance Unit (TIFU): The Unit will provide temporary support for PFI projects until market conditions improve, ensuring projects in areas such as Education, Waste and Housing can proceed as planned. Projects in procurement with a total capital value of around £13 billion will be the immediate beneficiaries. The Government is setting aside a total of £1 billion of potential debt finance in 2009-10 and £1 billion in 2010-11. The Unit has recently reached financial close on its first project, lending £120 million alongside the EIB and commercial lenders to the Greater Manchester Waste Development Authority's PFI project.

Education: The Government restated its commitment to BSF and expects PFI to contribute around one third of the total investment in the BSF programme over the course of the 2007 CSR period. Following the consultation by DCSF in 2008 on the future delivery of BSF, the Government has decided to move from the Wave based model used to date so that local authorities who are discussing new BSF projects with PfS can join the programme on a rolling basis if PfS assesses that they are ready.

Waste: the Government plans to commit more than £2 billion of PFI credits in the sector. The TIFU will support projects that are struggling to raise debt finance to ensure this investment is not slowed by current conditions in the credit markets. 

Click here for a full copy of Budget  2009.

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