by Paul O'Brien
Friday 27 February 2009
Participated in a Chatam House rules event organised by the Royal Institute of British Architects at One Great George Street in London. Basically the event was a debate about how we continue to construct public sector infrastructure in an environment where the banks are unable or unwilling to lend the money necessary to fund such vast projects.
As it was a private discussion I will have too generalise but needless to say the future of PFI looks grim as the sums involved are collosal and the banks are looking at maximum terms of seven to ten years for such high level loans. In the past of course the typical lending term for a PFI deal has been twenty five years. It looks like traditional procurement could be set for a major comeback.
One of the worrying items discussed was the fact that a large number of deals were at advanced stages and without Government guarantees would be unlikely to be concluded. If these deals for schools, hospitals, motorways and waste treatment facilities collapse then it goes without saying that the depths of the economy could plunge to a new all time low. It would of course be the final nail in the coffin for what is left of the construction industry and the knock on effects would be catastrophic.
Postnote:
Subsequently of course the Government have announced £13B of guarantees to make sure these deals don't collapse.
