PPPs and PFIs

Public Private Partnerships (PPP) and Private Finance Initiatives (PFI) are terms that are often used interchangeably. They are not the same thing — and understanding the distinction has never mattered more.

When Curshaw first published this guide in 2020, the UK's 700 PFI contracts were a known but still distant challenge. Five years on, the landscape has shifted substantially. Contracts are expiring. Policy is changing. A new generation of PPP models is being actively designed. And the decisions being made now — by contracting authorities, funds, providers and government — will determine whether the UK's critical public infrastructure is handed back successfully or not.

This updated guide sets out what PPPs and PFIs are, how the market has evolved, and what the emerging picture means for those with live contracts.

What is a Public Private Partnership?

A Public Private Partnership (PPP) is a long-term collaboration between the public and private sectors to deliver public infrastructure or services. PPPs emerged from the recognition that the private sector could bring capital, expertise and operational discipline to assets that the public sector needed but could not always fund or deliver efficiently on its own.

PPPs take many forms. The most common include joint ventures, strategic infrastructure partnerships, concessions, and Private Finance Initiatives. A useful principle: all PFIs are PPPs, but not all PPPs are PFIs. The terminology also varies internationally — what the UK calls a PFI, the United States typically calls a P3, and the Netherlands may refer to as a DBFMO (Design, Build, Finance, Maintain, Operate).

What makes a PFI different?

The defining feature of a PFI is its financing structure. Under a Private Finance Initiative, the private sector provides upfront capital — through a combination of debt and equity — to design, build and operate a public asset. In return, the public sector makes regular payments (known as unitary charges) over the life of the contract, typically 25 to 30 years, covering repayment of the capital, interest, operational costs and a return to investors.

A further structural requirement is the Special Purpose Vehicle (SPV), sometimes called Project Co. This entity enters into the contractual arrangements with the public sector body and engages financially with private shareholders and lenders. The SPV sits at the centre of the commercial and legal structure for the life of the contract — and, as contracts approach expiry, its orderly wind-down becomes one of the key tasks of the handback process. Curshaw has published detailed practical guidance on winding up a PFI project's SPV.

How the public sector funds its side of the arrangement typically falls into one of two categories:

General budget funding is the standard mechanism for PFIs, particularly for availability-based assets like hospitals, prisons and schools — facilities that do not generate a direct revenue stream from users. Funding comes from general taxation rather than being ring-fenced to the project.

User charge funding is more common in concession-based PPPs, where the asset generates income directly — toll roads being the most familiar example. Here the fees collected from users contribute directly to project costs.

The history of PFI in the UK

The PFI model was introduced in the UK in 1992. Over the following two and a half decades, it became the dominant mechanism for financing new public infrastructure — hospitals, schools, roads, prisons, defence facilities and more. By the time the Government announced in 2018 that PFI had run its course as a new financing model, over 700 contracts had been established with a combined capital value of approximately £57bn and estimated total lifetime repayments of £290bn.

In 2012, a revised model — PF2 — was introduced with changes intended to address some of the criticisms of PFI, including greater public sector equity participation and improved transparency requirements. PF2 was cancelled alongside PFI in 2018.

The decision to end new PFI and PF2 procurement did not, of course, end the contracts already in existence. Those 700 projects — hospitals, schools, prisons, roads, defence assets — continued operating. And they continue today, moving steadily towards their contractual expiry dates.

For an analysis of how the public narrative around PFI has evolved — and where it has been misleading — see Curshaw's piece on whether the government is truly inheriting poor value assets from PFI. For a comprehensive understanding of why PFIs were introduced in the UK and whether they have achieved the aim of rebuilding the public realm through off balance sheet financing, construction and maintenance of state critical infrastructure with risk transfer, read this report produced by Curshaw on behalf of the AIIP.  

Where we are now: the expiry challenge

This is the defining issue for the PFI market in the 2020s.

According to data published by NISTA — the National Infrastructure and Service Transformation Authority, which in April 2025 absorbed and replaced both the Infrastructure and Projects Authority and the National Infrastructure Commission — there are currently around 665 operational PFI and PF2 projects in the UK. Of these, 140 are due to expire before 2030. In this decade as a whole, the first 147 expiries represent a combined contract life value of over £50bn.

These are not routine contract endings. Every PFI expiry involves the private sector handing back to a public sector contracting authority critical operational infrastructure — a hospital, a school, a prison — that must continue functioning without interruption. In addition to the complex commercial and contractual exit, each contracting authority must simultaneously design, procure and stand up a replacement operating model. This is what Curshaw calls the double-whammy, and it is the central challenge facing the market right now. 

The evidence to date is concerning. The NAO's March 2025 report — Lessons Learned: Private Finance for Infrastructure — confirmed that many contracting authorities lack up-to-date contracts, have insufficient data on asset condition, and have no clear asset registers. The Public Accounts Committee has warned of serious disruption to vital public services if government fails to prepare adequately. Curshaw has published its own detailed response to the NAO report.

The window for effective preparation is narrower than most authorities realise. Meaningful contract renegotiation becomes significantly harder beyond seven to nine years before expiry. Authorities that begin at the three-year mark are not preparing — they are managing a crisis. Curshaw has set out the full practical guidance on preparing for PFI expiry.

The funding question: PPPs in other parts of the UK

It is worth noting that the 2018 ban on new PFI and PF2 procurement applied to central government in England. Scotland and Wales have continued to use related models throughout this period.

Scotland operates the Non-Profit Distributing (NPD) model and the hub programme, which cap private sector returns and give the public sector greater involvement in governance. Wales uses the Mutual Investment Model (MIM), a PFI-adjacent structure in which the public sector holds a shareholder stake and receives a share of any profits. Both models have attracted scrutiny of their own — particularly around transparency and the distribution of risk — but they demonstrate that the appetite for private finance in public infrastructure has not disappeared; rather, it has evolved.

New PPP models?

Five years after PFI ended, the political and economic context has shifted again. The new Labour government, facing a public sector maintenance backlog estimated at £49bn and a capital-constrained fiscal environment, has signalled a cautious return to private finance for specific, targeted applications.

The Government's 10-Year Infrastructure Strategy, published in June 2025, confirmed that new PPP models are being explored — explicitly ruling out any return to PFI or PF2, but acknowledging that "a well-designed PPP model can bring in private sector discipline to reduce deliverability risk." The strategy identifies community healthcare and public estate decarbonisation as the initial focus areas, with Euston Station cited as a pilot for a more complex application. Curshaw published its response to the 10-Year Infrastructure Strategy on publication.

NISTA — now responsible for both overseeing legacy PFI contracts and developing future delivery frameworks — is working to co-design any new model with the market, informed by lessons from PFI, current models in use across the UK, and the March 2025 NAO report.

The AIIP — the Association of Infrastructure Investors in Public Private Partnerships, established by Curshaw and representing around 80% of the provider market by capital value — has published 35 recommendations across seven areas for an improved model. These include greater transparency, reduced contract complexity, standardised handback processes supported by asset data, and the use of digital technology — including digital twins — to enable performance monitoring throughout a contract's life. The AIIP's broader report on the PFI model and the social infrastructure challenge sets out the full analysis.

The NAO's own assessment is instructive: PPP projects, it concluded in March 2025, are "usually delivered on time and on budget." This sits in notable contrast to the non-PFI New Hospitals Programme, which has been beset by delays, with some hospitals not expected to begin construction until 2039. Curshaw has examined the maintenance funding question for the New Hospitals Programme in detail.

What this means for the market today

For contracting authorities with expiring PFI contracts, the immediate priority is preparation — not observation of the emerging policy debate. The 147 contracts expiring this decade require action now: commercial contract reviews and potentially resets,  joint expiry planning with providers, and a clear strategy for the post-PFI operating model. The IPA/NISTA PFI expiry data provides the baseline picture; the Curshaw expiry guidance sets out what to do next.

For funds and providers, portfolio-level visibility of expiry risk is essential. Contracts managed independently at project level may obscure the aggregated picture — the concentration of near-term expiries, the consistency of asset data, the readiness of SPV teams. See Curshaw's work with InfraRed Capital Partners and Equitix for examples of what standards-based portfolio review looks like in practice.

For policymakers and those shaping the next generation of PPP, the evidence is clear: the model can work. The failures of PFI were not failures of the principle but, in many cases, of implementation — overly complex payment mechanisms, insufficient public sector commercial capability, and a lack of the standardised processes and data disciplines that would have made contracts easier to manage and easier to exit. The Counterpoint report, published by Curshaw, sets out a new approach to resetting complex public private projects.

The opportunity now is to design better from the outset, and to exit the existing contracts well.

Curshaw's role

Curshaw is a specialist PFI and PPP commercial consultancy. We work with contracting authorities, funds and providers across the full commercial lifecycle — from contract review and reset, through expiry preparation, to handback delivery and post-PFI target operating model design.

We established theAIIP and have advised on the UK's largest PFI expiry. Our approach is evidence-led, software-enabled and genuinely independent — we work with both sides of these contracts because we know that collaboration, not adversarialism, is the prerequisite for outcomes that are efficient, effective and equitable. Read more about our approach and our work.

If you have a PFI contract expiring in the next ten years, we would be glad to talk.