Chancellor George Osborne announced proposed changes to the Private Finance Initiative (PFI) that will see an end to long-term catering and soft facilities management (FM) tie-ins.

The revamped version of PFI, known as PF2, will be announced in the autumn statement tomorrow (5 December) and aims to ensure that taxpayers receive a share of the financial benefits under a new system that promises to be more transparent.

The original scheme, launched in 1992, was designed to attract private investment to public sector projects. After development of the infrastructure, private sector companies would operate the facilities, such as catering, cleaning and security. These deals would often involve lengthy tie-ins, of 25 years or longer.

But the Chancellor’s PF2 scheme would see an end to long term service contracts run by the contractor or its subsidiaries. The Government will instead be able to retender service contracts for new providers in order to get a better deal.

School PFI contracts 'should exclude meals' >>

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By Janie Manzoori-Stamford

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