The PFI Legacy: Lessons for UK Infrastructure

In the run up to the 2025 Spending Review, there will be a focus on the infrastructure needed to deliver on Government’s Missions and on how this should be funded, including the role that private finance can play. We do not expect to see a direct return of the Private Finance Initiative (PFI) in its original form, but private funding should have a role to play in unlocking the infrastructure the UK needs and new funding models can and should learn lessons from PFI.

PFI played a key role in infrastructure funding in the UK for c. 20 years (around 700 projects with a capital value of c. £60 billion). PFI projects will continue to operate for another 20 plus years. This creates a rich evidence base to inform future funding programmes.

In this article, we set out six key lessons from PFI for Government, to help the public and private sectors work together to close the infrastructure funding gap.

1. Be clear in business cases – is the funding model unlocking infrastructure which could otherwise not be funded? Consider affordability alongside value for money
2. Set out acceptable and unacceptable funding models and remain consistent over time – this helps the private sector build a pipeline with certainty
3. Consider ring-fencing funding for condition and asset maintenance across the public sector asset base
4. Use long-term contracts when demand is highly predictable or where changes in use can be accommodated without significant adaptation of the asset
5. Consider models for disaggregating services from assets and procuring FM across multiple assets
6. Manage contracts and retain risks proactively and efficiently throughout the contract life (before, during and after)

This can drive additional investment, improve outcomes, manage risk and accelerate delivery.

Read the full article here.