Andrew Hirst 15 November 2022

Could key infrastructure at risk if PFI contract expiry isn’t taken seriously?

Could key infrastructure at risk if PFI contract expiry isn’t taken seriously? image
Image: alljoh / Shutterstock.com

Over the next ten years, approximately 200 PFI contracts will expire with an asset value in the region of £10bn posing some complex challenges in relation to the return of infrastructure back to the public sector and its ongoing operation and maintenance.

PFI contracts provide critical public services in the sectors of education, health and social care, housing, waste and defence. To ensure the delivery of these vital public services and protect the public purse, these contracts need to be managed effectively throughout their life cycle.

In our experience, supporting a number of local government clients, the process and complexity for transition is being vastly underestimated, even authorities who believe they are approaching contract expiry early are likely to wish they had started sooner. Echoing this, the National Audit Office (NAO) wrote in its annual report that it had: 'identified opportunities to improve preparations and encouraged departments to take early action.'

Unless the handback process is properly managed authorities could find the infrastructure they receive back is in a much worse condition than expected. In an ideal world, buildings would come back in the condition required by the project agreement. However, that isn’t always likely to be the case partly because the handback processes and standards specified by early agreements are often unclear or underdeveloped.

It’s therefore crucial that the transition from the existing PFI contracts to any new arrangements is properly managed to ensure continuity of services and the facilities are handed over by contractors in an appropriate condition.

The management of the expiry of PFI contracts is essential for key infrastructure, but it also allows authorities to address legacy issues within the contract. We’ve worked with a number of clients to review PFI contracts in anticipation of them expiring. These contracts also often provide opportunities to drive sustainability and cost efficiencies, two topics high on the agenda for both public and private sectors. However, it is just important to act sooner, rather than later.

Andrew Hirst is partner at Womble Bond Dickinson

SIGN UP
For your free daily news bulletin
Highways jobs

Director of People

Lancashire County Council
£108,697 - £117,998
As a leader at Lancashire County Council, you’ll join an authority with real scale, courageous ambition and deep pride in place. County hall
Recuriter: Lancashire County Council

Director of Strategy and Transformation

Lancashire County Council
£108,697 - £117,998
As a leader at Lancashire County Council, you’ll join an authority with real scale, courageous ambition and deep pride in place. Preston, Lancashire
Recuriter: Lancashire County Council

Care and Support Assistant -Longlands

West Northamptonshire Council
13.52ph
About the role We are looking for a dedicated Care and Support Worker to join our team at Longlands Care Home in Daventry. In this rewarding role, you will provide compassionate, person-centred care to older people and those living with dementia, includin Daventry
Recuriter: West Northamptonshire Council

Highway Design and Construction Manager

Bolton Council
Grade N, scp50 £62,443 to scp53 £65,663 per annum, plus essential car user allowance
We embrace AI to enhance our operations and to innovate our services. Bolton, Greater Manchester
Recuriter: Bolton Council

Social Worker - Huddersfield Royal Infirmary

Kirklees Metropolitan Council
£38,220 - £40,777
Looking to appoint as a Level 2 or Level 3 Social Worker. Kirklees, West Yorkshire
Recuriter: Kirklees Metropolitan Council
Linkedin Banner