Privatisation knocks at PFI's door

The Treasury's Private Finance Taskforce, the driving body behind all PFI projects, is itself being prepared for transfer into the private sector.

Plans have been announced to convert the taskforce to a 'merchant bank', currently being given the title UK Capital. This is one outcome of a wide-ranging study of PFI operations carried out by Sir Malcolm Bates, chairman of Pearl Assurance. His analysis, which took in some recent highly publicised failures - mainly big-ticket IT projects - concluded that access to greater resources is needed.

The plan is to secure this by limiting the government shareholding to less than 50%. UK Capital may then bring in new money by, amongst other means, taking an equity stake in funded projects.

Meanwhile, the British Medical Association has renewed its opposition to PFI-funded hospital projects. The BMA has argued for some time that in the long run private financing of public healthcare could lead to rising costs and falling standards.

Elliott Chase