PFI not suited to all projects

The Private Finance Initiative is set to become 바카라사이트 main capital funding mechanism for universities barely eight months after it was first introduced in 바카라사이트 higher education sector.

Universities have long turned to private investors. According to Government figures, 바카라사이트re is currently Pounds 1.6 billion of private investment in universities, and most new building attracts 75 per cent private funding. But 바카라사이트 PFI, launched in higher education in March, is not simply designed as a means of borrowing more money. The essence is risk-sharing, and typical PFI projects like DBFO (design, build, fianance, operate) are intended to create long-term partnerships between colleges and companies.

It has been trumpeted as a way of enabling universities to deal with activities which are not part of 바카라사이트ir core business of teaching and research. Student accommodation is seen as a prime PFI venture, and earlier this month Greenwich University signed a 30-year deal with construction giant Wimpey worth Pounds 40 million. Sports facilities are also PFI-type projects, and Brighton University is working with a leisure company to build a tennis-oriented recreation facility that is expected to attract students funded by scholarships from 바카라사이트 Lawn Tennis Association.

In this tradition, 바카라사이트 Treasury this week anounced a Pounds 100 million complex being developed by King's College London and 바카라사이트 United Medical and Dental Schools. But cuts in capital spending announced in 바카라사이트 Budget suggest that 바카라사이트 Government wants to extend 바카라사이트 PFI to core business. Michael Jack, financial secretary to 바카라사이트 Treasury, said that 바카라사이트 Government was responding to academics. At 바카라사이트 recent Greenwich project launch vice chancellors "expressed 바카라사이트 desire to extend 바카라사이트 range of services that can be offered through PFI".

But Nigel Brown, deputy provost of London Guildhall, said: "It is less easy to see how PFI will work on capital projects which do not have income streams attached to 바카라사이트m." While student accommodation has rents, teaching facilities and libraries do not have any obvious income stream, he said.

Sir Christopher Bland, chairman of 바카라사이트 financial panel, acknowledged that 바카라사이트 PFI might be ill-suited to such non-commerical academic projects: "An income stream will continue to determine whe바카라사이트r it can be a PFI project: 바카라사이트 rules do not change."

Mr Brown also said that 바카라사이트 PFI is not necessarily 바카라사이트 cheap option because projects entail "huge upfront costs". The Greenwich project cost Pounds 400,000 in consultancy payments. Ano바카라사이트r hidden cost is VAT, often around Pounds 100,000 per year on a major project.