Department for Communities and Local Government | Public Private Partnerships - Private Finance Initiative
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Local Government Finance
Public Private Partnerships
Private Finance Initiative

The Private Finance Initiative (PFI) is a form of public-private partnership (PPP) in which local authorities can gain access to new or improved capital assets (most commonly, but not always buildings). Unlike traditional procurement the public sector does not buy the assets, but rather pays for their use, together with associated services (for example, security, cleaning, etc). Capital investment in the assets is made by the private sector which recovers its costs over a long contract period (often 25 years or more).

There are several ways in which PFI projects can offer better value for money than the traditional option of buying the asset and being responsible for running and maintaining it:

  • The private sector operator bears the major risks involved in the design, building, financing and operation of the asset. This makes both overruns and additional costs less likely and means that the local authority does not bear any costs involved.
  • There may be greater efficiencies in both the building and running costs (eg in relation to energy management).
  • The authority will pay on a performance-related basis for the use of the asset and for its continuing management, which provides incentives for the contractor to build the asset to a high standard and maintain it in a good condition.

General information on Local Government PFI

  • PFI credits - The various stages of application for Central Government support. Also a record of the level of support provided
  • PFI grant - How grant is paid to local authorities for operational projects
  • PFI contracts - The way in which PFI contracts should be written
  • PFI regulations - Regulations under the present and old capital finance regimes
  • Endorsed Projects List - A list of projects endorsed as ready to go to procurement by the Project Review Group. Also includes various statistics, including the number of operational projects and a regional analysis

CLG Sponsored PFI programmes

Other useful websites:

HM Treasury general PFI / PPP policy site - HM Treasury has responsibility for general PFI policy

CLG website on local government broader PPPs and, in particular, Strategic Service Delivery Partnerships

Building Schools for the Future

Local Improvement Finance Trusts (LIFT):
Department of Health site
Community Health Partnerships site

The 4ps (The Public Private Partnership Programme) - the Local Government body with expertise on PFI, PPPs and complex projects and programmes

Partnerships UK - a public private partnership with a public sector mission to support PFI and PPPs.

Enquiries to:
Central Private Finance Unit
Zone 1/A5
Eland House
Bressenden Place
London SW1E 5DU
Tel: 020 7944 4228
Fax: 020 7944 4259
E-mail: capital.finance@communities.gsi.gov.uk

CLG is not responsible for the contents or reliability of the linked web sites and does not necessarily endorse the views expressed within them. Listing should not be taken as endorsement of any kind. We cannot guarantee that these links will work all of the time and we have no control over the availability of the linked pages.

CLG can only offer an informal interpretation of legislation and it is for the authorities to seek their own legal and accounting advice.

Last updated on 5 June 2008
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