8. Question 8-How much impact has the financial crisis had on launching new Private Finance projects? Is the crisis likely to have a permanent effect on the Private Finance market?
8.1 The impact of the financial crisis has been felt in two main respects: the impact on senior debt financing for projects (availability and cost), and the impact on Government's future spending plans (potential reductions in investment programmes).
8.2 Having said this, despite less than favourable market conditions, it is important to recognise that significant projects delivered through the private finance route are still closing during this challenging time. It is still possible to secure financial backing for high quality projects. For example, John Laing secured a major waste project with the Greater Manchester Waste Disposal Authority. This was achieved through extensive work between the Authority, John Laing, partners and funders; together with vital support from Government and backing from the Treasury's Infrastructure Finance Unit. The project is recognised as the largest municipal waste contract in Western Europe, with a total value to the Viridor Laing consortium of £3.8 billion. In addition, John Laing has also closed significant projects in the UK education and fire and rescue sectors, including the Barnsley Building Schools for the Future programme valued at over £250 Million and the North East Fire And Rescue Authority project (NEFRA), valued at £27 million.
8.3 In response to financial market difficulties, HM Treasury established the Infrastructure Financing Unit ("IFU") in 2009, which has facilitated the closing of projects which might have otherwise suffered from funding shortfalls (for instance, the Greater Manchester Waste project referred to above).
8.4 Conditions in the project financing markets are gradually easing, with debt pricing beginning to reduce, albeit still high by historical levels.