What is the PFI?

What are PPPs?

Whenever a private sector organisation works alongside a public sector body, this can be referred to as a Public Private Partnership (PPP) and these can take many forms. This method of procuring public services is not new. However, it has had a higher profile in the UK over the past 5 years due to the Private Finance Initiative.

What is the PFI?

First launched in the UK in 1992, the PFI has since grown into one of the government’s most significant means to fund infrastructure developments. In the past, public authorities paid contractors directly for construction projects. However, through the PFI the private sector pays for construction and will then fully service and maintain the infrastructure for a period of up to 30 years in return for an annual payment.

Is it Privatisation?

No, the public service provider remains the same. For example, on a hospital PFI project, the private sector will provide new hospital buildings and will maintain them for the agreed concession length, approximately 25 – 30 years. The private sector can also provide the support services, such as cleaning, catering and portering throughout this time allowing the NHS Trust to concentrate on the clinical services and healthcare provision within the new facility.

Are PFI projects specific to the UK?

Various forms of PPP are being used by Governments around the world. Some countries, such as France and Spain, have a long history of public and private sectors working together, with the first French concession set up as far back as the 16th Century. In Europe, Portugal, Spain, Ireland and Netherlands are at the forefront of PPP procurement. These countries have recognised PPP as an integral part of national infrastructure development.

Outside of Europe, the most active PPP markets are Canada, the Middles East, South Africa, Japan and Australia. The arrangements of the PPP models involve a range of different relationships including privatisations, outsourcing and private financing.