PFI hand-back – are you at risk?

Sheena-Sood-BW-2019

If you were involved in design or construction of PFI projects about to expire, be prepared for fallout in the form of claims against you as the facilities are handed back. By Sheena Sood

PFI was introduced by the UK government in 1992 to encourage private sector businesses to tender to local and central government authorities for the provision of public infrastructure and services such as schools, hospitals and roads. PFI was expanded in 1997 under Tony Blair’s Labour, and the coalition government in 2012 introduced PF2 as a revised form. In 2018 the government retired both PFI and PF2, and the National Infrastructure Strategy published in November 2020 confirmed that it would not reintroduce the PFI or PF2 models of project finance.

Sheena-Sood-BW-2019

Between 1997 and 2010, an average of 55 PFI contracts were signed per year, which decreased to a total of 84 between May 2010 and its culmination in 2018. By that point there were a total of 704 PFI or PF2 projects, of which four were still in construction.

Over the next 10 years more than 200 PFI contracts will end, covering assets worth over £10bn. On expiry, in most cases the ownership of the asset will be transferred to the public sector, which will be responsible for ensuring the continued running of the facility.

Against this background we are seeing issues arising with the hand-back of the PFI asset, and with claims against the contractors and designers of the facility.

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