New research by EveryDoctor shows how powerful private finance and construction firms are lobbying ministers to revive PFI, a model once condemned as a “catastrophic waste of taxpayers’ money”.
In a few weeks, the chancellor Rachel Reeves will decide whether to revive a controversial financing scheme once condemned as a “catastrophic waste of taxpayers’ money” and a “costly racket”.
The previous Conservative government scrapped the Private Finance Initiative (PFI) in 2018 after official reviews concluded that it was poor value for money.
But EveryDoctor can now reveal that Labour’s move to bring the model back has followed intense lobbying from companies that operate PFI contracts and from major construction firms.
Under PFI, public bodies entered into long-term contracts with private companies to finance, build and maintain new public buildings in return for fixed annual payments. Hospitals and schools delivered through PFI were later found to be 70% and 40% more expensive, respectively, than if they had been built using conventional public borrowing.
In June, the government announced that it was considering reviving a new version of PFI that would be used for new health facilities, as part of its 10-year infrastructure plan.
The move followed several meetings between ministers and the Association of Infrastructure Investors in Public Private Partnerships (AIIP), an industry lobby group for PFI companies.
AIIP, which is chaired by former New Labour minister John Hutton, met with Treasury minister Darren Jones in December 2024, according to ministerial meeting records published by the government.
The lobby group held a further meeting with Karin Smyth, the Minister of State for Secondary Care, in February “to discuss NHS capital challenges”. Just months later, NHS England chief executive Jim Mackey revealed that discussions were underway with the Treasury to revive PFI.
In September, AIIP published proposals for a new PFI scheme claiming that it would unlock a “£1 trillion investment in British infrastructure”.
Wates, one of the UK’s biggest construction companies which has held stakes in a number of PFI projects, has also lobbied the government to revive PFI. The firm attended two separate roundtable meetings with housing minister Matthew Pennycook alongside other construction companies to discuss infrastructure earlier this year.
Calls for a reformed PFI model have also come from the Future Governance Forum (FGF), a think tank with close links to the Labour party. Senior civil servants were reported to be studying FGF’s plans, which the think tank claims avoid the previous pitfalls of PFI.
Several of FGF funders could potentially stand to benefit from a new public-private partnership scheme. Among them are Vanguard Asset Management, Quinbrook Infrastructure Partners, The British Venture Capital Association (BVCA) and outsourcing firm Mitie Group.
The NHS Confederation, a membership organisation whose members include NHS trusts and private health companies, has similarly called for a new public-private partnership model that “address some of the criticisms of PFI”.
However, there appears to be significant disagreement among proponents for reviving PFI over the extent to which the scheme should be reformed.
AIIP, whose members include current PFI investors, has called for a new scheme to include guaranteed minimum returns and reduced risk, proposals even more favourable to the private sector than previous incarnations.
The lobby group’s plan is in stark contrast to the reforms proposed by both the NHS Confederation and FGF which envisage the state have greater real oversight and control.
It is EveryDoctor’s view that those lobbying for a new “PFI-light” are either naïve or wilfully ignoring history.
Private investors are demanding an even bigger ransom from taxpayers than last time with guaranteed returns, reduced risk, and control over public assets for decades to come.
PFI apologists insist there’s no alternative, but the evidence couldn’t be clearer. The government’s own spending watchdog found that publicly funded hospitals and schools were far better value for money than those built under private finance deals.
If we repeat the mistakes of the past, we’ll be handing billions more in dividends to investors instead of investing that money where it belongs in NHS for staff, patients, and safe public infrastructure.
Rather than paying for profits, we should rebuild our NHS ourselves keeping it publicly owned, publicly funded, and working for the public good.
As EveryDoctor recently revealed, 69 NHS trusts remain trapped in £21 billion worth of PFI contracts, draining funds from frontline care every single year.
We cannot afford to make the same mistake twice.
