We are fast approaching a contract expiry ‘peak’ for private finance initiatives. Jennifer Brown explains the importance of planning ahead and key questions for identifying relevant concerns and potential next steps.
Contents
704 PFI / PF2 deals reached financial close between 1992 and 2016, with a combined capital value of over £57 billion. With the average operational period of a contract being around 28 years, expiry is due to peak in the coming years.
The Infrastructure and Projects Authority (IPA) expects senior leaders to commence planning for private finance initiative (PFI) expiry at least seven years prior to contract end.
The importance of planning ahead
37 of the PFI / PF2 deals cover waste services. Local authorities must act now to make the best decisions for the future of this provision:
Ensure smooth hand-back processes, for continuity of services – critical for service users’ confidence in delivery
Reduce the risk of unanticipated issues / liabilities – allowing rectification of issues within the terms of the contract prior to expiry
Provide comfort over asset condition and maintenance history – helping to inform future procurements (and avoid risk-pricing)
Facilitate scrutiny of operations – ensuring value for money doesn't taper for the residual period of the contract until expiry
Allow sufficient time to carefully consideroptions for the future – creating space for complex stakeholder management in a timely manner
Act too late and this could significantly reduce the opportunity to enforce the local authority’s rights and remedies under the contract (including potentially withholding unitary charges) and any potential claims identified post-expiry may not be recoverable if the project company’s assets have already been removed.
Of course, maintaining a positive and effective working relationship with the incumbent service provider is preferred and a robust communication strategy will assist with this. If desired, there could be the opportunity to extend the existing contract to allow more time to consider future plans and ensure a fully competitive process is developed – as this is the only way to ensure true value for money for council tax-payers.
Identifying opportunities after PFI expiry
The expiry of your PFI contract is complex, and sometimes daunting, but it's also an opportunity to refresh the approach to waste services in line with current legislation, societal trends, and evolving technology.
Asking some key questions can help you identify relevant considerations and potential next steps.
Environment Act 2021 ( in particular, the implementation of consistent recycling, including food waste collections, for households [1] )
Robust change in law contract provisions
Social value themes and policy outcomes relevant to the contract
Monitoring and recording performance of commitments throughout the contract lifespan
Internal capacity and capability (existing and potential)
Value for money (eg, local authority access to lower cost finance)
Flexibility to adapt
Risk appetite (including reputational risk)
Too short can offer poor value for money (ie, recovery of set up costs)
Too long can be inflexible to market and technology developments
Services to consider: residual, recyclates, food, green, bring sites, street scene
Efficiencies in procurement and contract management for a single contract
Separate contracts allow greater flexibility but may result in interface issues
Key risks to consider: waste composition, energy prices, recyclate values, insurance costs
Party best-placed to manage the risk should own the risk for best value for money (ie, reduce risk premiums)
Economies of scale and buying power
Practical and political complexity of partnering
Inter-authority agreements
Footnote 1: Consistency in household and business recycling in England consultation feedback (from 896 respondents) currently being analysed with government response expected in 2023
How Grant Thornton can help
We have worked on many of the original waste PFI contracts and are currently advising on the expiry and next steps for one which is due to expire before 2030. This deep understanding of the waste sector, our insight into government, and innovative approaches, will support you to bring ideas into reality.
Our waste specialists can draw upon expertise from across our firm (eg, financial modelling, tax, accounting, place-based analytics, economic consulting) as well as a network of partners to tailor our services to your needs. Our national reach ensures that we’re always local to your project.
For more insight and guidance, get in touch withJennifer Brown.
Strengthening Local Authority investments: practical options to de-risk and reposition LATCOs in 2026
Local Authorities enter 2026 still facing sustained financial strain. Despite uplifts in core spending power across the sector as a whole, pressures from social care demand, contract inflation and higher borrowing costs continue to erode resilience across the sector. Recent parliamentary evidence confirms that, whilst rare, the number of Section 114 notices issued since 2018 is at an all-time high, underlining the systemic nature of the challenge and the scrutiny on historic corporate investments and subsidiary performance.
Grant Thornton delivers an industry-led offshore wind and Multipurpose Interconnector (MPI) Task Force chaired by National Grid and RenewableUK
Decarbonising the UK’s energy system and wider economy will require rapid electrification of heat, transport and industry, leading to a sharp rise in electricity demand. The National Energy System Operator’s (NESO) analysis suggests electricity demand could increase by 25-40% by the early 2030s and almost triple by 2050, reaching up to 700-785 TWh per year, compared with around 290 TWh today
The Public Sector Finance Leaders Barometer is a nationwide pulse check of the pressures, priorities and sentiment shaping local government finance. Compiled from the insights of Section 151 officers and finance directors, it provides a data‑rich view of how leaders are navigating 2026, a year defined by financial constraints, regulatory complexities and rising demand.
