Source · Select Committees · Public Accounts Committee
Recommendation 26
26
Accepted
Half of PFI contracts expire soon, requiring robust management for asset return.
Conclusion
Half of the 665 ongoing PFI contracts are set to expire within the next decade, at which point the assets usually revert to the public sector.58 It is important that public authorities manage these contracts well so that assets in good condition return to the public sector.59 Unitary charges are the fees PFI companies charge public authorities to make the asset, for example a school, available. These unitary charges, which are agreed at the beginning of the contract, run for the duration of the contract term (typically 25 to 30 years).60 As of 31 March 2024, public sector bodies were due to pay £136 billion in unitary charges up until 2052–53 for ongoing PFI contracts.61
Government Response Summary
The government agrees with the committee's observation. NISTA has an ongoing PFI Contract Management Programme supporting authorities with expiry planning, asset condition assessment, and contract management reviews. NISTA will also publish new contract and performance management guidance later in 2025 to improve contract enforcement.
Government Response
Accepted
HM Government
Accepted
6.1 The government agrees with the Committee’s recommendation. Recommendation implemented 6.2 NISTA, formerly IPA, set up a PFI Contract Management Programme in 2020 to support contracting authorities managing their PFI projects. NISTA’s Contract Management Programme supports authorities in a number of ways, including: • Expiry: NISTA supports contracting authorities with projects approaching expiry through training, guidance, direct advice and support and assurance. Working alongside departments, NISTA will engage with contracting authorities around seven years from expiry to set out all the expiry-related resources available and will provide an early support package to help ‘kick-start’ expiry planning. • Asset Condition: Following on from the publication of the Asset Condition Playbook, NISTA will undertake surveys across a wide-ranging assets which will provide data to better understand the assets in the PFI legacy portfolio and drive improvement in asset condition, It also gives NISTA the opportunity to improve central support for public bodies in assessing the state of their privately financed assets. • Contract Management Support: NISTA is expanding its engagement across the legacy PFI portfolio through the introduction of contract management support reviews for operational projects. NISTA is also broadening the range of skills in its pool of PFI experts to ensure that it can provide direct support to public bodies across a range of disciplines, including technical, commercial and financial. • New Guidance: NISTA will be publishing contract and performance management guidance later in 2025 to help contracting authorities improve their management of the contract and performance. This will address prior concerns raised by the NAO and the Committee and, in turn, strengthen authority’s abilities to enforce contract terms including on asset condition.