Profits made by companies building new hospitals, prisons, roads and schools under the Private Finance Initiative will be curbed under new rules rushed through by the Treasury that come into force today (1 Nov).

The move comes as the Government has pledged to step up spending on infrastructure, largely building schools and hospitals in partnership with the private sector, as a way of lifting the economy out of recession.

Treasury officials have produced new rules in the past fortnight that mean that future private sector investors will receive only 30% of any profit on refinancing, while the public sector takes 70% of the profit. Currently gains on refinancing are split 50-50. The new terms apply on any net gains over £3m, when projects are refinanced.

The Times (Sat)