Navigating the challenges and opportunities of PFI contracts

With billions set to be spent on Private Finance Initiative (PFI) contracts before major expirations in 2030, how can schools prepare for a smooth transition while safeguarding budgets and services?

The UK is set projected to spend over £9bn this year on PFI contracts and a total of £48bn in the next five years. This level of spending will continue until we see the first peak in contracts contract expiration around 2030, when assets worth £14bn (based on their original capital value) will transfer back to public ownership. 

However, a recent BBC investigation has uncovered growing concerns over the expiry of PFI contracts, particularly for schools and hospitals. Schools tied into long-term agreements have struggled to get essential repairs done while paying “astronomical” costs over the past 25 years. With contracts set to expire, many fear that private firms will walk away, leaving a backlog of repairs and a hefty bill for the public sector. Unfortunately, this is not a new issue - five years ago, the National Audit Office (NAO) had warned that without proper management, buildings could be handed back in poor condition, placing further strain on public finances.

Currently, 151 active PFI contacts provide school facilities across the UK, costing approximately £1.2bn in the next financial year. By 2030, 25% of those contracts will expire, with assets originally valued at approximately £1bn transferring back to the public sector. However, not all assets automatically revert, depending on the terms of the PFI contract.
 

Are you planning early and collaborating? 

Although there is guidance on managing PFI contract expiry, early planning and collaboration are essential. This is particularly crucial in education, where many schools have converted to academy status, adding complexity to the transition. 

Effective planning should begin well before the expiry phase, ensuring all stakeholders - including schools, local authorities, and procurement teams - are aligned. This includes large-scale procurement for future services and financial modelling for capital and revenue budgets. The public sector must ensure that the knowledge and skills developed through the PFI contracts are retained and integrated into public estate management systems.

Do you recognise your challenges? 

One key challenge is ensuring a smooth transition that does not compromise the quality of services. The transfer of asset data is critical to the expiry process.

Asset condition plays a pivotal part in contract expiry. Contracting authorities need to assess and document the current state of assets to determine necessary steps for a compliant handover.  Failure to do so could result in assets being returned in poor condition, with lifecycle works left incomplete. This increases the financial risk for the public sector, which may have to fund remediation post-contract.

Boards must be assured that the complexities involved in transferring assets and services back into public ownership are managed effectively, ensuring buildings are safe from day one.
 

Does your school need support with PFI expiry?

PFI contract expiry can be complex, impacting budgets, facilities, and future service provision. Visit our website or speak to one of our experts today at information@entrust-ed.co.uk