Infrastructure could return to the public sector in an 'unsatisfactory condition' when PFI contracts come to an end, the public spending watchdog has warned today.

In a new report, the National Audit Office (NAO) said there are currently over 700 PFI contracts, with most sent to expire from 2025.

However, the report found many local authorities have underestimated the time, resources and complexity involved in managing the end of PFI contracts.

The NAO said this could result in assets being returned back to councils in a worse condition than agreed in the contracts, leading to extra costs for repairs and maintenance.

The report calls on the Government to take a more strategic or consistent approach to managing PFI contracts as they end.

Gareth Davies, the head of the NAO, said: 'With the bulk of PFI contracts expiring from 2025 onwards, there is still time for government to make changes that will help public sector bodies to exit from contracts successfully.

'If government does not provide strategic support and public bodies do not prepare sufficiently, there is a significant risk that vital infrastructure such as schools and hospitals will not be returned to the public sector in the right condition and taxpayers and service users will bear the brunt of additional costs and service disruption.'

Alison Ring, ICAEW public sector director, said: 'Public bodies are very experienced with handling ongoing PFI contracts, but with most contracts not due to finish until 2025 or later they have much less experience of managing those that are expiring. The Infrastructure & Projects Authority will be critical in supporting the bodies responsible for the contracts, and ensuring lessons learned are shared across the public sector.

'Millions of pounds are at stake, so it’s extremely important that the Government invests to get the best value for money for taxpayers as PFI contracts come to an end.'