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3 July 2012 | Adam Leach
The UK government will announce its reforms to the private finance initiative (PFI) funding model in a matter of weeks, according to the head of Infrastructure UK.
The controversial financial mechanism, where public projects are funded through private investment, was a recurring topic for discussion at the Government Construction Summit held in London yesterday.
Speaking during a panel discussion on infrastructure, Roger Robinson, chief executive of Laing O'Rourke, Europe, said PFI is important in reducing public debt while supporting the UK construction industry. “We have to reduce national debt but we have to do more and surely PFI is the answer, or some form of PFI,” he said.
He admitted there were problems with model, but that it remained important. “Yes, there was too much design at bid stage. Yes, there were inappropriate 25-year service contracts and too little standardisation of contracts, but it’s no coincidence that PFI has been adopted across the world.”
Speaking on the same panel, Geoffrey Spence, chief executive of Infrastructure UK, told the audience news on PFI reform will be announced shortly. He said: “I think you’ll hear more from the government in the next few weeks on PFI reform.”
However, he advised those in the construction sector to manage expectations around the impact of a renewed PFI approach. “Just be a bit careful here about expectations. If you look at what PFI has financed historically, we’ve done an awful lot of it.”
He did highlight the renovation of a number of schools across the UK as one area where PFI will have a role to play, while Robinson identified the building of new nuclear power plants.