The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Public sector: Labour’s crisis of confidence threatens progress of UK PFI

The UK government’s commitment to imminent PFI transactions appears to be wavering. Have critics of the funding strategy won the argument?

By Joti Mangat

Like many capital markets inventions, it’s a great idea in principle. The UK’s public finance initiative, a way of funding public expenditure with private capital, can finance complex and risky public interest projects at competitive rates while providing a liability-matched, retail price indexed home for pension fund money.

But now a crisis of confidence threatens to undermine the steady growth of the market. Doubts focus on the arrival of the largest non-defence PFI financing ever arranged in the UK, the redevelopment of St Bartholomew’s Hospital (Barts) and the Royal London Hospital. Arranged by Deutsche Bank and Morgan Stanley, the deal will supply around £1.5 billion ($2.6 billion) of long-dated RPI-linked paper, insured by monolines Ambac and FSA, into a tight market.

Recent reports suggest that the government is considering abandoning the project in favour of a more suitable and cheaper location for the new facilities. The Barts and The London NHS Trust, the body set up to administer the scheme, has tried to allay these concerns. “The cancer and cardiac element of the new hospitals programme is appropriately sized and meets the needs of east London’s growing population, and there is no appropriate capacity elsewhere in London,” it says.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree