The Infrastructure and Projects Authority (the "IPA") has recently published information regarding Private Finance Initiative ("PFI") and Private Finance 2 ("PF2") projects as at 31 March 2024 (PFI and PF2 projects: 2024 Summary Data - GOV.UK).
PFI and PF2 are forms of Public Private Partnerships ("PPPs") which, as discussed in our previous blog, Unlocking Potential: PFI Contracts in Scotland | Brodies LLP, are long-term contracts under which a private sector entity designs, builds, finances, maintains and operates infrastructure assets, with the public sector paying a monthly "unitary charge" for their use.
In 2012, the PFI model was replaced with PF2. The PF2 programme for new projects was cancelled by the UK Government in October 2018. However, given that PPP/PFI projects are long-term contractual arrangements (typically 20-25 years in duration), a significant proportion of the projects signed before 2018 remain operational and will expire in the coming years.
The Data – Key Takeaways
The data published by the IPA indicates that there are currently 665 operational PFI projects across the UK, however the data does not include other forms of PPP projects, such as NHS projects procured under the Local Improvement Finance Trust ("LIFT") programme, procurements under the non-profit distributing ("NPD") and hub models used in Scotland or the Mutual Investment Model in Wales.
The UK's portfolio of operational PFI projects is split across a range of sectors (as set out in the table below) but is concentrated in particular sectors – notably, healthcare and education. Department for Education (DFE) and Department of Heath and Social Care (DHSC) PFI projects account for a combined total of 47% of the current PFI portfolio (313 projects).
Department/Agency | No. of operational PFI projects |
Department for Education | 170 |
Department of Health and Social Care | 143 |
Scottish Government | 74 |
Department for Levelling Up, Housing and Communities | 54 |
Department for Transport | 54 |
Home Office | 32 |
Northern Ireland Executive | 29 |
Ministry of Defence | 25 |
Department for Environment, Food and Rural Affairs | 24 |
Welsh Government | 20 |
Department for Culture, Media and Sport | 17 |
Ministry of Justice | 15 |
Cabinet Office | 3 |
Department for Work and Pensions | 2 |
Foreign, Commonwealth and Development Office | 1 |
HM Revenue and Customs | 1 |
Security and Intelligence Agencies | 1 |
Source: PFI and PF2 projects: 2024 Summary Data - GOV.UK
The IPA data demonstrates that there are significant increases in the number of projects set to expire across the PFI portfolio, with 2036 being the peak year for expiry (with 69 projects expiring in that year alone). The data shows that 140 PFI projects will expire before 2030. For all projects, early engagement between procuring authorities/agencies and project stakeholders is crucial to ensuring the process of expiry runs smoothly. For a detailed overview of the expiry or "handback" process, please refer to our previous blog series on this topic (PFI expiry – a project in its own right | Brodies LLP).
Should you require any advice regarding PFI expiry/handback, please get in touch with our infrastructure team.
