Making For The Exit

• Published date: 05 May 2021
• Subject Matter: Finance and Banking, Financial Services, Fund Management/ REITs, Project Finance/PPP & PFI
• Law Firm: Gunnercooke
• Author: Mr Tim Heywood

Those public bodies lucky enough to have benefitted from the Private Finance Initiative (PFI) (the Conservative party infrastructure scheme later adopted and greatly expanded by the Blair and Brown governments) will inevitably at some stage need to plan for the expiry of their PFI contract. For those public bodies that were in the first wave of PFIs (which saw many new schools, hospitals and prisons built in the late 1990's), that time is fairly close.

Many will be due to expire within the next 8 -10 years or so.

This will represent a real challenge as they assess their contracts to see what they actually say about the handover arrangements, asset management and lifecycle costs. That is quite apart from working out how the school or hospital will be able to resource the cleaning, maintenance, security, catering and other services which it will inherit on expiry.

Most public bodies in a PFI have only small teams managing the relationship with the private sector partner and very few of them will be the people who negotiated the deal in the first place, so 'corporate memory' may well be lacking.

The National Audit Office (NAO) is all too aware of this and has duly published its report and guidance "Managing PFI Assets and Services as Contracts End" (June 2020).

In their report, the NAO stress the importance of the public sector getting a suitably skilled and experienced team together to...