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Treasury rescues waste PFI projects with £3.5bn injection - UPDATE

Waste management private finance initiative projects are set to benefit from a £3.5 billion cash injection from the Treasury to kick start projects that have been delayed by the credit crunch.

The extra money, is to be available from now, for school, hospital and waste PFI deals, and is the latest initiative from the Government to boost the economy.

Top of the list for new investment are energy-from-waste plants and waste PFI projects, including a Government contribution to the £3.3bn Greater Manchester PFI waste deal. MRWrecently revealed that the European Investment Bank is putting a £200 million loan towards the £750 million of initial finance cost required. 

In total, £13bn of public investment in procurement will be safeguarded. Transport projects will receive £3.1bn and school projects will receive £2.4bn, the £13bn also includes funding for housing or regeneration schemes. Around 110 PFI projects are currently in the pipeline.

From now, the Government will lend to those PFI projects that cannot raise sufficient debt finance, lending alongside commercial lenders and the European Investment Bank. A Treasury spokesman said: The Government has signalled that the waste sector is an important sector requiring infrastructure investment. Waste has become an important sector not least because there are European Commission Directives in place that require the UK to come forward with waste plants, otherwise the UK risks being fined.

The Department for Environment, Food and Rural Affairs has been working with Partnerships UK, the Treasurys own public private partnership, to develop an effective model going forward.
Treasury chief secretary Yvette Cooper believes the cash will breathe new life into PFI schemes, in which banks and contractors build new projects and then rent them back to the state for up to 35 years. Due to the credit crunch some banks have drawn back from investing in the schemes.

Cooper said: These projects will create jobs and support the economy as well as delivering vital infrastructure that local communities need. Thats why were determined to get them moving as soon as possible without extra delays. Where the private markets arent working properly, its right that the Government should act to get things moving.

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