AIIP Report - The Private Finance Initiative Model and the Social Infrastructure Challenge
Curshaw and DLA Piper are pleased to have supported the Association of Infrastructure Investors in Public Private Partnerships (AIIP) in publishing its inaugural report, "The Private Finance Initiative (PFI) Model and the Social Infrastructure Challenge".
The report is the AIIP's contribution to broadening public understanding of PFI, which has faced public and political scrutiny in recent years. Its findings draw on a survey of SPV directors conducted in July 2024 and case studies from AIIP members' portfolios.
Key findings
The Report finds that:
154 PFI projects - schools, hospitals, roads, defence services and other state-critical social infrastructure - are being handed back to the public sector in the next five years.
Without reform in the PFI sector, state-critical infrastructure services will be put at risk. There is potential for extended disputes, project insolvencies and serious operational disruption, ultimately affecting service users.
Should this be the case, the AIIP foresees considerably weakened appetite for investment in future UK social infrastructure, including through any modernised PPP under consideration. The new Government's growth mission will not be possible without the effective foundations of infrastructure to support it.
Among other recommendations, the report calls for greater collaboration to implement an industry-wide "reset" of the PFI sector. This would lay the foundations for the successful transition of assets and services from the private to the public sector and reinforce investor confidence in UK social infrastructure.
The time for the public and private sectors to work together to reform the PFI sector is now.
This is bolstered by notable findings from the AIIP survey data. Particular highlights include;
58% of respondents believe that the PFI market is likely to deteriorate over the next three years, with only 9% believing it will improve.
68% of respondents believe that public sector contracting authorities they work in partnership with are generally under-resourced for contract management, with only 26% aware of their public sector contracting authority having contract management plans and processes in place
65% of respondents lacked confidence in the ability of central Government guidance to influence "on-project" behaviours.
We’d be interested in hearing any views on the contents and key findings of the report, please get in touch with hello@curshaw.com if you would like to discuss them.