One of the biggest government private finance initiative programmes is in serious trouble as the contractor struggles to obtain the £1.3 billion it needs from banks to kick-start the project, a leaked Ministry of Defence memo has revealed.

A crisis meeting led by Ursula Brennan, a senior MoD civil servant, took place last month amid concern that the £12 billion defence training review programme will not get off the ground.

“Currently there is a £1.3 billion affordability issue in the programme; the problem is borrowing money at a reasonable rate for PFIs,” the memo states.

Ministers have insisted that the troubled programme to centralise the military’s specialised engineering and technical training at St Athan in South Wales is back on track and would be signed before MPs’ summer recess.

But officials revealed that the deal will not now be signed off before the recess, with the possibility that contractor Metrix, led by defence group Qinetiq, “could walk away”. The memo admits that the “currently planned programme will be hard to achieve” and the implementation team is “conducting fall-back planning”.

The state has provided another £44m to keep the project going, a sum recently confirmed in a parliamentary minute. The government came under fire this year when it emerged that it had already provided “contingent liability” funding of about £50m.

The memo also reveals a large disparity in the number of “man training days” that Metrix will be able to provide and the number needed by the forces to train engineers and technicians properly. One officer is to try to persuade Metrix to raise the number of “man training days” to 1.2m a year, while the services are to be told to cut the total they require to 1.5m.

The memo was leaked to Mark Pritchard, Conservative MP for The Wrekin in Shropshire, who said: “With further delays and escalating costs, no more public money should be allocated to the programme until its viability has been fully considered.”

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