Treasury officials have come to the rescue of local public bodies by using an accounting trick to kick-start the moribund private-finance initiative (PFI) market, without breaching strict new capital spending limits. Under guidance sent to public bodies on 13 May, PFI transactions previously considered ‘off balance sheet' will now come on to the balance sheets of the individual procuring authorities – such as councils – but, in many cases, will continue to be budgeted for as revenue. The move follows the adoption of new international financial reporting standards across the sector. The Treasury's decision will help authorities to forge ahead with projects which had been, in part, delayed because of fears they would count against capital expenditure limits imposed on the public sector because of the recession. Total investment in capital projects across the public sector is set to halve from £44bn this year to £22bn in 2014. Nick Prior, head of government and infrastructure at advisor Deloitte, said: ‘This clarification will... ensure there is no change to budgetary requirements for current commitments to PFI and it will allow public bodies to move forward PFI and public-private partnership projects that were being held up due to uncertainty,' he said.
