Headlines: November 25th, 1997

Councils and their private sector partners are to get more help with Public Finance Initiative projects. Government support for projects, (PFI credits) is to be doubled and development procedures will be streamlined. The measures are aimed at removing the twin disincentives where local authorities incurred development costs with no assurance of revenue support and potential partners had to bid for projects uncertain of whether there would be any Government support. The Local Government (Contracts) Bill will shortly receive Royal Assent and this will also help by removing private sector concerns about the powers of local authorities to enter into PFI deals.Local Government Minister Hilary Armstrong said: “We have swept away the barriers to successful PFI projects and partnerships in local government, as we said we would. Authorities and the private sector can now use the opportunities PFI provides to remedy investment backlogs in schools, transport systems, police, fire, waste and other services. Every authority should now consider how they can use public/private partnerships and the PFI to benefit their own areas.”

The level of investment that can receive Government support has been increased from £250m to £500m. The new total of ‘PFI credits’ has been split into investment areas to limit the uncertainty about whether support is likely to be available. Education is a priority area and the 1998/99 allocation for investment in schools is £130m.

Increased support for the project development work will come from a newly created Project Review Group, which will be chaired by the Treasury Taskforce. The Group will ‘sign off’ projects when they are ready to enter the procurement stage. They will also monitor subsequent progress. The group will include members drawn from the sponsoring Government Departments and The Local Government Association’s Public Private Partnerships Programme.