Experts fear the chancellor’s hopes of delivering on capital investment promises in his third comprehensive spending review could be jeopardised as PFI contractors become more selective about the deals they bid for.
Amey, a preferred bidder for the part-privatisation of the London Underground, is reviewing its position as the cost of bidding mounts and controversy surrounds the accounting treatment of the deals. Amey said it would take a more ‘selective attitude’ towards new PFI bids.
PFI capital expenditure only accounts for 10% of total government investment, but at around £5bn out of £40bn of annual capital investment, the industry’s capacity to deliver was already a concern. ‘I’m still amazed we haven’t seen more investment in building the teams to complete the deals,’ said Tim Stone, PFI consultant at KPMG.
Health and education were the main beneficiaries of Brown’s £61bn largesse, but other ministries also benefitted from the windfall. Deputy prime minister John Prescott will outline regional investment plans today.
The spending review also saw the chancellor pledge more money for the Office of Fair Trading to fight competition issues in the wake of the Enron collapse.
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