What is a PFI?

The Private Finance Initiative (PFI) was introduced in the mid-1990s as a means of bringing private sector funding and expertise into the running of public services. It was initially introduced in health and transport but now covers most public sector activities.

The principle underlying the PFI is that the risks and responsibilities associated with running a public service should be placed where they can best be managed. In this manner, improvements to public services can be made without upfront public sector funds; and while under contract, the risks associated with such huge capital commitments are shared between parties, allocated appropriately to those best able to manage each one.