Under the Private Finance Initiative, private companies financed, built and maintained schools, hospitals and other public buildings in return for regular payments, known as the unitary charge, spread across contracts often lasting 25 years or more. Part of that charge pays for future maintenance and replacement. When a contract ends, the building passes to the public sector, and the condition it is in depends on whether that work was actually done.
The National Audit Office examined the risk in June 2020, surveying 107 of the 571 PFI contracts in England and receiving 75 responses. Around 55 per cent of respondents said they needed more knowledge of their assets' condition. Thirty per cent were not monitoring annual maintenance spending, and half did not keep an asset register. Of those that did monitor maintenance, 35 per cent said their contracts gave them insufficient access to check it. Among authorities that had asked contractors for information, 20 per cent said the contractor had been uncooperative.
The NAO found that surpluses in the lifecycle funds set aside for maintenance are "typically retained by the SPV and paid out to investors", the special purpose company set up for each contract, creating "a perverse incentive to underinvest in assets". One hospital authority found "a large gap" between what was paid into its lifecycle fund and what was spent on maintenance, but could not challenge it because of limited access rights. In one school contract, the company refused the authority access to key areas of the building for an independent survey.
The main lever authorities hold is withholding part of the unitary charge, and it does not always reach unfinished maintenance. One contract manager told the auditors that deductions could be made only for non performance and unavailability, and that "there is no contractual right to withhold the unitary charge on the grounds of incomplete rectification work". Of 28 surveyed contracts with a retention fund to cover outstanding work, ten respondents did not expect the fund to be large enough.
After expiry, recovery gets harder. "Once a contract has expired, any surplus cash will be paid out to investors and the SPV company will be closed," the NAO said, adding that it "may be difficult for the public sector to recover any payments from the SPV post‑expiry". Of nine respondents that had already taken back buildings, four were unhappy with their condition. The sample was small, and the evidence was not all negative: 42 of 59 respondents expected to receive assets in the contractual condition or better.
The NAO also found an imbalance of experience. Across the UK, 328 authorities are responsible for more than 700 PFI contracts, and 182 of them hold just one, while the ten largest investors own more than half of all contracts.
In March 2021, the Public Accounts Committee, chaired by Meg Hillier, found "a lack of urgency and overall plan" as more than 200 projects worth over £10 billion approached expiry within a decade. Some authorities did not hold a complete copy of their contract; one had been varied as many as 75 times, and others were stored on old technology such as CD ROMs. Around 300 PFI schools had become academies, so the council managing a contract might not be the body inheriting the building, which the committee said could create "perverse incentives" to limit spending on managing the contract.
The committee asked HM Treasury and the Infrastructure and Projects Authority to set out a support plan within three months, publish a disputes protocol and say what action they would take against investors found to be deliberately uncooperative. On 16 August 2021 the authority's deputy chief executive, Matthew Vickerstaff, told the committee it had published a support plan that day and that a public and private sector protocol was being developed. He reported that 52 per cent of the 52 expiry health checks it carried out in 2020/21 had rated projects Amber or worse for expiry readiness. Detailed guidance on preparing for expiry followed in February 2022. The Conservative government had already stopped signing new PFI and PF2 contracts in its 2018 Budget, but that did not affect the hundreds already running.
Under Labour, the Infrastructure and Projects Authority published a PFI Asset Condition Playbook on 10 March 2025. It recommends a "joint voluntary process" in which the authority and the private company jointly appoint a surveyor "at least 5 years from expiry", agree the defects and plan rectification. It is guidance, not a legal duty. The parties can agree that the surveyor's findings are "final and binding in satisfaction of any contractual obligations" for handback surveys. They can also agree "the extent to which the Authority may agree not to levy deductions or performance failure points" and to put wider contract penalties "to one side, including retrospectively", while the agreed repairs are carried out. In return, the company may accept step in rights for repairs it does not finish on time.
The Playbook requires these terms to be recorded in writing and approved through each party's internal processes. It does not set out how an authority should judge whether the repairs it secures are worth more than the deductions and penalties it gives up. We found no published record of how often authorities have agreed to set penalties aside, or what it has cost or saved them.
On 1 April 2025 the authority merged with the National Infrastructure Commission to form the National Infrastructure and Service Transformation Authority (NISTA), a unit within HM Treasury that now runs the PFI Centre of Excellence. On 26 March 2026 it added eight contract management guides. Local Partnerships, which works with NISTA, says expiry health checks and the contract management programme have generated value "estimated at £1.7billion". It does not publish the calculation, or say how much of that is cash recovered.
More than 600 UK PFI projects are due to expire by 2048, nearly half of them between 2032 and 2037, according to Local Partnerships. HM Treasury, through NISTA, owns the national support programme. Councils, NHS trusts and other authorities are responsible for enforcing their own contracts. No published national figures show how many buildings have been handed back below the contractual standard, how much unfinished maintenance has been recovered from contractors, or how much public bodies have paid to fix it themselves.