Private Finance Initiatives

Private Finance Initiatives (PFI) were developed to provide financial support for Public-Private Partnerships between the public and private sectors.

Purpose

Partnerships, such as arrangements under PFIs, mean that the public sector benefits from commercial dynamism, innovation and efficiencies brought by private sector investors. These investors contribute their own capital, skills and experience. Private money can raise the level of public service provision in deprived areas or provide major physical or community infrastructure.

Applications

The most common form of PFI is design, build, finance and operate (DBFO). Under a DBFO contract, the private sector partner designs, builds, finances and operates the new facilities in return for an annual fee. The local council retains ownership of the assets but an operator is committed to significant capital investment in those facilities.