Recommendation 11

The IPA estimated it takes seven years to adequately prepare for the expiry of PFI contracts.28 The Treasury recognised the importance of starting preparations early, both to ensure maximum value is extracted from the contracts in their final years and to plan for the transition to new ownership arrangements.29 We received written evidence from Leeds City Council, which told us that as a PFI contract comes to an end, the authority would need to manage the expiry process alongside its daily operations, which can put pressure on already stretched resources. It asserted that it was therefore not possible to start early expiry preparations alongside other work without additional resources.30 The NAO report found that the expiry process required a different set of skills, such as contract negotiations and asset management, compared to managing the day-to-day operations, and that many authorities would be unable to provide these in-house. Some smaller authorities have just one person managing multiple PFI contracts, with limited additional support, meaning the resourcing challenges of PFI expiry are magnified.31 22 C&AG’s Report, paras 2, 1.8 23 Q 11 24 Q 18 25 Q 14 26 Q 41 27 C&AG’s Report, para 1.16 28 C&AG’s Report, para 3.15 29 Q 94 30 MPC0002 - Leeds City Council, paras 8, 9, 11 31 C&AG’s Report, para 2.2–2.4 Managing the expiry of PFI contracts 13