As dozens of private finance initiative (PFI) agreements are approaching the end of their contractual lifespans over the next five years, the public and private sectors need fairer, more effective, modes of long-term collaboration.

Prior to her recent resignation, Amanda Pritchard, the outgoing CEO of NHS England, backed private borrowing as a way to deliver better-quality buildings and technologies that could boost NHS productivity. As her comments have been met with concurrent support from other decisionmakers like the Health Secretary, Wes Streeting, public-private partnerships (PPPs) are returning to the agenda. From their inception at the end of the 20th century to the intriguing potential of capital funding today, we ought to consider the past, present, and future ways in which PPPs contribute to public sector service delivery.

On the 5th of February 2025, Public Policy Projects hosted the Sustainable Estates Solutions Conference (SESC), uniting decisionmakers against key challenges facing the public sector estate today. One panel discussion examined the potential for PPPs to boost the resilience of public sector estates. Whether supporting the construction of new buildings or else the integration of new measures to existing assets, private partners can have a major impact on the operational, environmental, and health profile of public sector estates.

A brief history of PPPs

PPPs aim to combine the resources and expertise of both sectors, often leveraging private capital to provide funding for projects. These agreements can span decades, providing public organisations like the NHS with long-term access to privately owned tools, services, and assistance. Since the early 1990s, PPPs have been a part of UK infrastructural development. In 1991, the concept was introduced, and in 1992 the first PFIs commenced under John Major’s government. Private partners within these contracts would support asset development, provide finance, and operate public facilities within a given partnership.

When New Labour won the 1997 general election, the use of PPPs was expanded. The government eagerly took legislative action, passing the National Health Service (Private Finance) Act 1997 to provide a legal framework for the use of PFIs to finance NHS projects. PPPs peaked in the 2000s, with billions of pounds invested into public projects ranging from schools and hospitals through to prisons and libraries. With 150 NHS PFI contracts now set to expire between 2025/26 and 2029/30, the NHS and other public sector organisations must decide on whether to bring services in-house or seek new contract partners. Public-private collaboration will certainly recommence for the latter, but their terms and mechanisms remain undetermined.

Capital funding and the future of public-private partnerships

In one of her final interventions as NHS England’s Chief Executive, Amanda Pritchard suggested that using private funds to deliver better-quality buildings and technologies could boost NHS productivity, enabling the delivery of high-quality modern healthcare. Like other public sector organisations, the NHS has struggled to preserve service quality amid a severe lack of NHS capital funding. In fact, Lord Darzi’s investigation of the NHS last year identified a £37 billion shortfall in capital investment over the past 15 years, hindering the NHS’s ability to maintain and upgrade its infrastructure. Continuously demanding more money from taxpayers to fill in these capital shortages as service demands, maintenance backlogs, and climate-related disruptions mount, may be unviable.

Other senior figures have expressed their support for greater private-sector contributions within the NHS. Government advisor Paul Corrigan, for example, called for the normalisation of private funding for capital projects in the NHS, while Wes Streeting has also indicated that he is sympathetic to the idea of leveraging private capital. These sentiments were echoed by the NHS Confederation, which has welcomed greater private capital into the NHS within its 2025 report on capital efficiency. Their support comes in a bid to meet the two per cent annual productivity challenge set out in NHS England’s long-term workforce plan as the capital budget still falls an estimated £3.3 billion short of annual requirements to meet these targets.

Since further use of PFIs was ruled out by then-Chancellor Phillip Hammond in 2018, the future of PPPs appears somewhat flexible. Other models of private financing, such as the Welsh Mutual Investment Model, have emerged with renewed optimism. Under this model, the public sector shares investment and risk with private partners, while removing other elements featured within PFIs that do not promote public interest. This gives the public sector more control and focuses on public benefit goals like environmental sustainability. The NHS Confederation has recommended policy changes to create routes to forms of private investments in England, including MIM, in line with the approach taken in Wales and Scotland.

Over the next five years, public and private sector stakeholders will identify opportunities to overcome capital-related financial barriers to development. Building on our Patient Safety and Sustainable Estates programmes, Public Policy Projects will be delivering a forum for this very discussion across three roundtable events. Policymakers, NHS trusts, regulators, and patient representatives will convene to consider the opportunities that NHS capital funding offers. For further information, please contact Kieran Cornwell, at Kieran.cornwell@publicpolicyprojects.com.