PFI—UK developments and reform
Produced in partnership with Mathias Cheung of Atkin Chambers

The following Banking & Finance practice note produced in partnership with Mathias Cheung of Atkin Chambers provides comprehensive and up to date legal information covering:

  • PFI—UK developments and reform
  • The Original Private Finance Initiative Model
  • The Introduction of Private Finance 2 (PF2) in 2012
  • Industry reaction to the PF2 model
  • The demise of the PFI/PF2 Model since 2018
  • Scotland—NPD, DBFM hub and MIM
  • Wales
  • Northern Ireland
  • Post-COVID-19 economic infrastructure strategy and support for private investment
  • Global initiatives

PFI—UK developments and reform

Public Private Partnerships (PPPs) continue to play a significant part in UK infrastructure provision, accounting for around 12% of public sector assets. However, their use in new projects has dropped off considerably.

In the 2018 Budget (delivered on 29 October 2018), it was announced that the government will no longer use PF2 on new projects (see News Analysis: Budget 2018—what does it mean for infrastructure and housebuilding?). The government has also reconfirmed in its National Infrastructure Strategy of November 2020 that it will not reintroduce the PFI/PF2 model in new infrastructure projects.

However, existing PFI and PF2 projects will continue to run, and given the typical lifespan of such projects this is likely to be for many years.

The Original Private Finance Initiative Model

The PPP model known as the Private Finance Initiative (PFI), widely used and promoted by the UK Government from 1997 onwards, underwent a rapid decline in use for new projects from around 2012. Criticised by HM Treasury for its inflexibility, and widely perceived by the general public as an example of the public sector enriching private investors at the expense of service quality, PFI was no longer considered to provide value for money. PFI projects, with a single unitary charge covering build, maintenance and services, were treated for accounting purposes as a revenue item, not capital expenditure. This kept the capital

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