Morton steps down from PFI

RUSSELL HOTTEN

and DAVID HELLIER

Sir Alastair Morton has been forced to step down, temp-orarily, as chairman of the Government's Private Finance Initiative because of intense pressure of work at Eurotunnel.

He told Kenneth Clarke, the Chancellor, earlier this week that he would not have the time to lead the project in view of Eurotunnel's current crisis and the forthcoming round of talks with its 225 bankers.

Mr Clarke said he understood the work load placed on the Eurotunnel co-chairman, due to the financial restructuring of the company, but also said Sir Alastair would be welcomed back when he felt able to return.

Sir Alastair, who has been chairman of the PFI for two years, will be replaced by fellow-PFI panel member Sir Christopher Bland, chairman of the NFC transport group.

Sir Alastair's forceful manner has sometimes created tensions, and he once confessed, to the Independent, to being dispirited by the progress of the PFI, which helps the Treasury attract private sector funding for public sector projects. More recently, however, the number of PFI projects has grown, and there are now an estimated 1,500 initiatives under consideration, including the re-development of the Treasury building in Whitehall.

Douglas Hogg, deputy director general of the PFI, defended Sir Alastair's role: "If the PFI was an easy project we would not need people like Sir Alastair. We do need a catalyst, a broker, a facilitator, and part of that process is confrontational."

Mr Clarke acknowledged yesterday that Eurotunnel would be talking to the UK and French governments. The company was quick to dismiss suggestions that it would be asking for financial help, and said: "The talks will be about the unfair advantages given to ferry operators, and things like that."

However, the Independent has learned that several of the Japanese banks involved in Eurotunnel are considering pressing the two governments to intervene. The banks, thought to be owed up to 30 per cent of Eurotunnel's pounds 7.8m debt, first knew of the company's plan to suspend interest payments when Sir Alastair appeared on the Today radio programme.

Eurotunnel was originally passed over by the banks as uneconomic and they now feel they were pressured into backing the project. "Many of us rejected being involved," one banker said last night, "only to find the UK government had approached the Japanese Ministry of Finance in order to persuade us to back it. Now we're hoping for some form of relief."

The banks will have to show the loans as non-performing, and they will suffer the effect of losing interest income on the loan from the profit and loss account. "The decision by Eurotunnel will hit pretty badly," one banker said yesterday. "It will cause serious problems on the profit and loss account, which, apart from anything else, means a lot of bonuses will not be paid."