In Broken Britain will discredited private partnerships once more become ‘the only game in town’?

Investors hope that if Labour wins the election it will “unleash a new era of private sector investment in infrastructure” and be “open” to the reinvention of PFI in some form.

But in a June 10th interview with the Financial Times, Lord John Hutton, chair of the Association of Infrastructure Investors in Public Private Partnerships (AIIP), said that there were “red lights flashing” over 150 or so PFI contracts that will come to an end in the next parliament. More than 300 PFI contracts will expire in the next decade.

He warned that if the incoming government does not act to prevent a wave of litigation it could deter investors and has urged the Treasury to intervene as relationships between several public authorities and the private sector over PFI contracts had turned “toxic”.

The Public Finance initiative (PFI) was launched in the early 1990s to allow public sector authorities build schools and hospitals through borrowing from banks and other investors, transferring delivery, cost and performance risk to the private sector who would then maintain the assets over decades.

It was finally ended by the Conservatives in 2018, after several NHS trusts required costly bailouts stemming from the high cost of the PFI schemes.

Whittington Hospital in north London is currently being sued by PFI investor Lloyds Banking Group about liability for a fire in 2018

A report by the National Audit Office had found that PFI had delivered poor value for taxpayers incurring billions of pounds in extra costs through PFIs, with yearly fees running at £10bn.

Most of the disputes are over maintenance and the condition of the properties and the AIIP is calling for the Treasury to play a more active role in managing problems on behalf of public authorities so they get settled before they reach court.

Max Curzon-Hope of Curshaw Commercial, a consultancy and AIIP founder (right), said:“Given Labour is sticking to the Treasury’s tight fiscal constraints, public private partnerships are the only game in town”.

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