This month has seen some interesting announcements concerning projects in the health sector.
Starting with LIFT, the destination of the LIFT portfolio has been announced, given the impending dissolution of the body of Primary Care Trusts. This is a key announcement, given the uncertainty which previously pervaded both equity and funder markets over the £2.5 billion LIFT portfolio.
From 1 April 2013 then, Community Health Partnerships Limited (formerly PfH), will:
- take transfer of the PCT’s shareholding in the LIFT companies, in most regions bringing their stake to 40% alongside the relevant Private Sector Partner’s 60%;
- take the benefit of the PCT’s subordinated debt investments into each scheme;
- become a direct participant in the Strategic Partnering Agreements; and
- become head tenant/landlord with responsibility for all LIFT buildings.
We will update you on the ramifications of this move in subsequent briefings.
The Treasury has also announced PF2, the successor to PFI, with accompanying guidance. The aims of this review of the much-maligned Private Finance Initiative was to counter the criticisms of the previous PFI procurement regime, some of them justified, some of them, in our view, not and to reflect the current issues in the funding market. It also moves forward the Government’s agenda to introduce new funding sources, principally pension funds, into the infrastructure market.
The provisions are lengthy and deserving of a more detailed analysis but the highlights are:
- The principles of the public-private shareholding of, amongst others, NHS LIFT are to be adopted more widely, meaning that the public sector will take some of the rewards of a successful project;
- Exclusion of certain FM services to give better value for money to the public purse;
- A slimmer slice of funding going to senior lenders and introduction of an equity funding competition where equity injections can be bid for;
- Streamlined and centralised procurement; and
- Greater transparency of the returns made by the private sector.