News
NHS PFI Hospitals Construction contractors face an even worse slump
02 March, 2009
Private Finance Initiative (PFI) schemes are private companies that build hospitals and schools, run and maintain them for a period of time e.g. 30 years, and receive an annual income from the government.
When it is said that the PFI schemes are in trouble because they cannot borrow sufficient money, then we know that our economic situation is bad.
In January this year it was reported that the government was planning to underwrite PFI deals in order to build schools and hospitals. However it would appear that the construction programmes that rely on PFIs are now at risk as the funding from major banks has dried up due to the global banking crisis.
The PFI schemes to build hospitals has taken a huge setback as £2.5 billion has been cut from budgets since 2007. The PFI scheme was scheduled to open or update approximately 20 new facilities within the next few years, but now with the recession, building contractors are facing huge slowdowns as the Department of Health cancels plans one after the other.
Construction contractors had welcomed the PFI schemes, as they were meant to provide sustainable income as well as lease back opportunities and the anticipated ownership of the buildings at the end of the lease period.