All things PFI

Though the Government officially scrapped Private Finance Initiatives (PFIs) as a funding model in 2018, many school groups remain tied into long-term contracts – often spanning 25 to 30 years. These agreements cover construction, refurbishment, and a range of services (e.g. facilities management, cleaning, and catering) through a fixed “unitary charge,” typically linked to inflation and the benchmarking of facilities management (FM) costs.

As inflation rises, FM costs rise too, and so do these PFI payments – putting increasing pressure on school budgets. Schools and academies often feel this strain most acutely because they are not direct parties to the PFI contract. Instead, all communication and contract changes must go through the local authority, which acts as the contracting body.

Key challenges schools face under PFI

1. Budget gaps

If funding from central government fails to keep pace with inflation, schools may face serious financial shortfalls.

2. Rigid commitments

PFI contracts are notoriously difficult – and costly – to exit early. Schools are usually locked in until expiry, limiting their ability to seek better value for money.

What can schools do?

At Stone King, we are often approached by clients seeking to renegotiate or amend their PFI contracts. While changes are technically possible through the “change protocol,” in practice, the process can be complex, slow, and expensive.

That said, there are meaningful steps schools and trusts can take to ensure better value and stronger accountability under their existing arrangements.

Strategies to improve outcomes under a PFI

1. Use the change protocol strategically

• Many PFIs allow for contractual changes categorised by value (low, medium, high).
• Bundle smaller changes into a single proposal to potentially reduce admin and negotiation costs.
• Align any proposed changes with long-term priorities – e.g. energy efficiency, net zero, or digital infrastructure.

2. Enforce performance monitoring

• Most PFI contracts include key performance indicators (KPIs) and a performance monitoring regime (PMR).
• Schools can apply financial deductions where service delivery (e.g. cleaning or maintenance) falls below expected standards.
• Unfortunately, this tool is widely underused. Schools should not leave this value on the table.

3. Push for open book accounting

Some PFI agreements allow for open book reviews, where the contractor is required to disclose actual costs.

This can help:

• identify inflated margins or mark-ups;
• benchmark prices against market rates; and
• support negotiations on overpriced services.

4. Benchmark against the market

• Commission a value-for-money review comparing your PFI services to equivalent market offerings.
• If PFI services are overpriced or underperforming, use the data to support contract changes or initiate deductions.

5. Work collaboratively with the local authority 

Since schools are not usually direct parties to the PFI, building strong relationships with the contract holder (often the local authority or a MAT central team) is essential. Push for regular reviews, joint planning sessions, and greater cost transparency.

Now, particularly as many schemes are nearing their end of life phase,  let’s turn to PFI expiry – it takes longer that you think!

A warning from recent events

A recent Schools Week investigation (Sept 2025) highlights what can go wrong without early planning for exit. In Stoke-on-Trent, where the country’s largest school PFI contract is nearing expiry, the local authority had to apparently inject £3.5 million in emergency funding to ensure basic repairs – such as roof fixes and internal refurbishments – were completed before hand back. Despite this, as of August 2025, we understand that an estimated £7.2 million in work remained outstanding. Headteachers expressed serious concerns about unresolved defects so close to exit. This situation reflects a broader trend: many local authorities simply no longer have the skilled teams that originally managed these contracts. Downsizing, retirements, and years of austerity have weakened internal capacity, which means schools must now play a more active role in protecting their interests.

How should schools be preparing for the end of a PFI contract?

There are a significant number of PFI projects still live. Most are due to expire within the next 5 to 10 years. According to the Infrastructure and Projects Authority, preparation should begin at least  seven years before expiry.

At Stone King, we advise on all aspects of PFI contract exit and the transition to new facilities management (FM) models. We recommend schools and trusts begin planning now by:

• reviewing contract terms and lifecycle requirements;
• assessing current and future estate needs, particularly around sustainability and net zero goals;
• evaluating in-house vs outsourced service models; and
• scoping new FM partnerships with a focus on flexibility, efficiency, and alignment with the school’s long-term strategy.

How should schools be preparing for their post-PFI future?

For many schools – particularly those within multi-academy trusts – contract expiry offers an opportunity to rationalise services, improve value for money, and take back control. Whether you bring services in-house, form a new outsourced partnership, or renegotiate with your existing provider, the key is starting the conversation early. We would advise schools to work constructively with your local authority or trust to develop a clear contract management and exit strategy. Schools have skin in the game – and should aim to secure the smoothest, most cost-effective transition possible.

Ciara Campfield is a partner and Head of Business and Social Enterprise at Stone King.