Many private finance initiative projects are to remain, in effect, off the government’s balance sheet. The decision means that hospitals, clinics, schools, waste and local authority projects can continue to be built under PFI without counting against the government’s capital expenditure totals.

With public sector capital spending set to halve in cash terms after 2011, that will come as a considerable relief to public bodies.

They face seeing capital expenditure drop from £44bn this year to a mere £22bn a year in 2013-14, a reduction that would have had an even bigger impact if the billions of pounds of PFIs and PPPs that are in the pipeline had to count within that.

Financial Times