The Treasury has stepped in to rescue stalled PFI deals by financing the shortfalls. Ministers will lend £2bn of public money to private firms building roads, schools and other projects under the Private Finance Initiative (PFI) as part of a new Treasury unit.

The Private Finance Initiative (PFI) was brought about in the early 1990s as a means of introducing private sector finance into projects that had previously been funded by the taxpayer.

With the economy in a fragile state, Chief Secretary to the Treasury Ms Yvette Cooper said the loans would ensure projects worth £13bn, including the £5bn M25 widening and the £3bn Manchester Waste PFI.

John Cridland, Deputy Director General of the Confederation of British Industry, said: "Getting PFI projects moving will help public service improvements continue and protect jobs in the construction and services industries.”