It’s back-to-school time, and with it comes a familiar flurry of activity, sharpened pencils, and a renewed focus on our public buildings. For many, it also brings memories of the RAAC crisis two years ago, when concerns about reinforced autoclaved aerated concrete in school roofs made headlines. That moment was a wake-up call, and it’s added fresh urgency to the need to get our PFI schools - and many other facilities - up to scratch as contracts near expiry.

If you're working in (or with) the public sector on infrastructure/outsourcing contracts, then the chances are that Private Finance Initiative (PFI) contracts are on your radar. This blog kicks off our new series exploring the expiry of PFI contracts, the handback process, and what the future of public-private partnerships (PPP) might look like in the UK. We’ll be tracking government strategy, sharing practical insights, and showcasing how our legal team can support you through this complex transition.

What is PFI, and why is expiry a big deal?

PFI was introduced in the 1990s as a way to deliver public infrastructure using private finance. It led to the creation of thousands of assets such as schools, hospitals, housing, waste facilities, and roads, to be built and operated by private sector partners under long-term contracts.

Over the next 5-10 years, many of those 1990s/2000s contracts are approaching their end. Expiry isn’t just about marking a date in the calendar; it’s about preparing for a major operational and legal shift. It should be considered a project in its own right, involving exit and transitional arrangements alongside the procurement of future services and asset management.

Handback: more than just a return of assets

Handback is the process of returning the facility to the public sector, but it’s not as simple as handing over the keys. The assets must be returned in the condition specified in the contract, often with detailed requirements around maintenance records, lifecycle works, and compliance. Because of course, the public authority has paid for this over the course of the whole contract (PFI has been likened to a very expensive car lease/purchase agreement). 

This is where things can get tricky. Unlike a car lease/purchase agreement, there shouldn't necessarily be a ‘balloon payment’ at the end of a PFI. However, contracts signed 20+ years ago may not reflect current standards or expectations; more work may be required and there is a very real chance of disputes arising. Compounding matters, there can be incomplete documentation and relationships that have been strained over the years. The risks - financial, operational, reputational - are very real.

Who’s leading the charge?

The recently formed National Infrastructure and Service Transformation Authority (NISTA - previously the IPA) is now leading the Government’s efforts to support public bodies through PFI expiry. Their guidance, including the Asset Condition Playbook, recommends starting expiry planning seven years before contract end, with asset surveys completed five years out.

This early start is crucial. It gives time to identify and resolve issues, avoid disputes, and plan for future service delivery, whether that’s insourcing, re-procuring, or transforming the service altogether.

Tips for local authorities and public sector bodies

Whether you're in local government or another public sector organisation, here are a few practical steps to get started:

• Collate your contract documentation - Dig out the original contract, schedules, variations, and correspondence. You’ll need a clear picture of what the handback obligations are, and what evidence you have to enforce them.
• Start the conversation internally - Bring together legal, finance, estates, and operational teams. Expiry planning is cross-functional, and early coordination is key.
• Engage with your private sector partner - Don’t wait until the final year. Start discussions now about asset condition surveys, lifecycle works, and handback expectations.
• Review the NISTA guidance - Their toolkits and playbooks are a great starting point. We can help interpret and apply them to your specific contract.
• Get legal advice early - Many expiry disputes stem from unclear obligations or missing documentation. A legal review now can save significant time and cost later.

Looking ahead: What comes after PFI?

While traditional PFI is no longer in favour, the Government’s new infrastructure strategy hints at a reimagined approach to PPPs. There’s talk of more flexible, transparent models that focus on partnership and long-term value.

We’ll be exploring these developments in future posts, along with practical guidance on asset surveys, dispute resolution, and service transformation.

How we can help

Our legal team is already supporting public sector clients through PFI expiry and handback. We understand these complex contracts, the risks, and the practical realities. Whether you're just starting to plan or already deep into the process, we’re here to help.

Stay tuned for our next blogs in this series ‘PFI Fridays’, where we’ll dive further into the expiry process, the legal implications of asset condition surveys and more.