Gordon Brown will have to inject up to £4bn of taxpayers’ money into private finance deals in order to ensure that infrastructure projects, stalled by the credit crunch, can be completed, a senior industry figure warned on Sunday, writes Jean Eaglesham.

Tim Pearson, director of private equity firm Innisfree and a spokesman for the PPP Forum, the trade body for the PFI industry, said the government needed to address a funding gap of up to 40 per cent of the project costs.

“The amount of money will probably be no more than £4bn, absolute tops, for the next 18 months,” Mr Pearson said.

“That would keep the industry going, it would keep the projects being completed, keep the new schools and hospitals going ahead.”

The Treasury is working on plans to inject taxpayers’ cash into big PFI deals such as the M25 motorway widening project, in a bid to get the projects off the ground in the face of the banks’ reluctance to lend.

Officials are drawing up plans that could see an infrastructure fund created to provide, in effect, long-term bridging loans from the taxpayer to PFI projects.

Alternatively, government departments may undertake the lending.

Copyright The Financial Times Limited 2018. All rights reserved.

Comments have not been enabled for this article.