PFI work ices over as redundancies mount

Almost £10bn of PFI projects have been put on hold including 240 education projects worth a total £2.3bn, new research has revealed.

The figures, from data provider Barbour ABI and reported in Building, come as the government is understood to be compiling a raft of measures to prevent schemes from being frozen due to a lack of finance.

Partnerships for Schools (PfS), the government delivery body responsible for the Building Schools for the Future programme, said it has convinced lenders Nationwide and Aviva to enter the schools market.

According to Building, other government measures being considered include advancing PFI schemes with money from the £100bn local authority pension fund, and boosting smaller schemes with funding from the European Investment Bank.

Although the EIB has already pledged £300m to help schemes reach financial close, Tim Byles, chief executive of PfS, said the sum was likely to ‘increase significantly’.

Construction News spoke to schools minister Jim Knight on the missing PFI millions. He said: “We have got six banks considering returning to the schools market, and additional interest from further afield. We are not out of the woods yet but we are in a pretty strong position.”

Looking forward, construction order books will be closely scrutinised over the next six weeks for an indication of where the market is heading. That’s because we are about to enter the period when most stock-market listed construction firms report full or half-year results.

Construction News reports that analysts are forecasting more job cut announcements before the end of March, particularly at firms that have managed to hold back so far, plus up to £3.5bn of land bank write-downs from housebuilders.

But order books could be the best indicator of how the industry is aligned. Andy Brown, analyst at Panmure Gordon said: ‘We will want to see what has happened to their order books and whether there have been any cancellations.’

Meanwhile, the economic fallout on construction consultants is showing no signs of abating. Last week, QS EC Harris said it would cut up to 380 jobs, or 10% of its global workforce. The cut follows a recent redeployment of 500 staff, and will be phased in over the rest of the year, reports Building. Meanwhile, rival consultant Turner & Townsend is also understood to be about to axe 32 staff.

In the contracting sector, Vinci said it is planning to make over 100 redundancies, or 3% of its 3,200 staff, after the merger of its UK contracting operations. John Stanion, chief executive of Vinci UK, has blamed the recession for the decision to consolidate its accounting, HR, insurance, IT and fleet management services across the divisions, which include Taylor Woodrow, Norwest Holst and Stradform.