4 March 2009 | Jake Kanter
The government has pledged up to £2 billion of loans to help finance struggling private finance initiative (PFI) projects.
Yesterday's Treasury announcement aims to safeguard £13 billion of key public infrastructure projects.
About 110 PFI projects, including the construction of hospitals and schools, were in the pipeline but some faced problems raising enough debt finance as banks cut lending in the credit crunch.
Yvette Cooper, chief secretary to the Treasury, said guaranteeing PFI deals would create jobs and support the economy.
"We're determined to get them moving as soon as possible without extra delays," said Cooper. "Where the private markets aren't working properly, it's right that the government should act to get things moving."
But Scottish National Party Treasury spokesman Stewart Hosie criticised the scheme. "It's proof positive that PFI is the economics of the madhouse," the MP said. "Why is public money being used to prop up a failing system that gives such a bad return compared to traditional public procurement?"
The Treasury did not detail which projects were at risk but gave examples of the 110 PFI projects that have issued a notice in the OJEU - worth about £13 billion combined. The projects included the M25 widening, Victoria Hospital Fife and Bradford Building Schools for the Future.
CBI deputy director-general John Cridland said in a statement: "Getting PFI deals moving will help public service improvements continue and protect jobs in the construction and services industries."