The Treasury ordered public bodies doing private finance initiative deals yesterday to require a much bigger share of any windfall gains from refinancing them in the future.

PFI deals are still being negotiated – not without difficulty – in spite of the credit crunch as some banks see their government-backed revenues as a haven in the financial turmoil.

However, the credit squeeze has seen funders demanding higher margins on the debt put into them and that has opened up the possibility again of significant refinancing gains if investment and interest rates fall to pre-credit crunch levels.

In a move to avoid the acute embarrassment of the early days of PFI, when investors in projects made millions of pounds from refinancings and it turned out that the taxpayer had no right to any share in the gains, the Treasury has upped the share it is demanding.

Financial Times