As PFI contracts expire, the workforce transition can be just as critical as assets and handback obligations. Our second expert forum for councils examined why early planning is essential to protect organisational knowledge, manage risk and shape future services.
Following our recent research on private finance initiative (PFI) contract expiry in London, we convened a pilot series of two expert forums to help councils navigate key challenges as contracts come to an end.
The second session brought together legal, technical and financial specialists from Baily Garner, Devonshires, Equans, Grant Thornton and Rider Levett Bucknall to explore two critical issues – condition surveys and workforce transition – directly in response to questions put forward by councils.
Here’s the key takeaways from the second forum, with more detailed insights below.
Key takeaways for councils
- Understand your contract in detail before making key decisions on surveys, handback and future services.
- Ensure the scope of condition surveys relates to both contractual requirements and long-term asset strategies.
- Consider the impact of technical findings on financial plans and capital forecasts as early as possible.
- Develop a workforce transition strategy early, including implications for TUPE (Transfer of Undertakings (Protection of Employment) regulations), pensions and staffing.
- Focus on the post-expiry operating model and avoid viewing handback as a cliff-edge event.
- Focus on building collaborative relationships with contractors and advisers to reduce disputes and improve outcomes.
What are the most significant issues coming out of condition surveys?
The discussion made clear that condition surveys are not simply about identifying defects. Their real value lies in helping authorities understand whether assets can be handed back in a safe, compliant and operationally effective condition. Surveys should also expose risks and liabilities (including capital expenditure) that councils may inherit after expiry.
Often, the most significant issues are systemic rather than isolated. Some surveys show that assets should have been renewed through lifecycle programmes but have instead been maintained beyond their intended replacement date. This creates uncertainty for councils about future performance and investment needs.
Why it is essential to define the scope of your survey carefully
The panel therefore highlighted the importance of carefully defining the scope of surveys to ensure they reflect both contractual requirements and future service objectives. A poorly scoped survey can leave councils with large amounts of information but limited evidence to support negotiations or decision-making.
Councils also find interpreting the contract effectively is a recurring challenge. Terms such as “good condition” and “properly maintained” can mean different things. This is especially the case in older contracts where handback provisions may be less detailed.
The panel emphasised that to manage such challenges, councils should regard surveys as an ongoing process rather than a one-off exercise. Early interim surveys provide time to identify trends, resolve potential disputes, undertake remedial works and build a stronger evidence base.
Joint surveys by both the local authority and service provider can help establish a shared understanding of asset condition and reduce the likelihood of disagreement later.
How should councils manage the workforce transition?
The PFI expiry process is fundamentally about people as much as it is about buildings and infrastructure. When a PFI contract ends, staff managing the asset or service automatically move to a new employer. This is usually either the public authority or a new contractor/service provider.
The Transfer of Undertakings (Protection of Employment) employment law (TUPE) protects employees’ rights and contracts when the business or service they work for changes hands. Similarly, the two-tier workforce code, expected to be reintroduced in autumn 2026, protects the rights of employees on outsourced public sector service contracts.
Decisions about whether services will return in-house or be procured through a new provider have significant implications for staffing, organisational management and financial planning, as well as compliance with employment law.
Why operational knowledge is a vital consideration
The operational knowledge that individuals delivering services hold is an important consideration. This knowledge can be extensive, particularly when someone has been managing a contract for many years and has built up a relationship with the service provider.
Clear communication and maintaining staff confidence are important with such significant transitions. Uncertainty can create concern among employees, place pressure on managers and increase the risk of losing valuable members of the team at a critical time.
PFI expiry should be a transition, not a cliff-edge
Successful expiry requires active contract management long before the agreement expires. Many problems become more difficult and costly to resolve when contracts have not been regularly reviewed and challenged.
Technical findings should inform practical business decisions and financial plans. But while councils need to comply with PFI contracts, maintaining productive relationships and managing competing interpretations constructively are equally important.
Rather than viewing handback as a “cliff edge” moment, councils should see expiry as a transition that creates opportunities to reshape services, improve asset management and align delivery models with strategic priorities and the current and future needs of residents.
About the panel
Our pilot series showcased multidisciplinary insight from our panel of legal, technical and financial specialists:
- Sarah Channin, Commercial Director, Equans
- Jamie Marsh, Partner, Rider Levett Bucknall
- Nick Moseley, Principal Consultant, and Wayne Butcher, Director, Grant Thornton
- Caroline Mostowfi, Partner, and Katie Maguire, Partner, Devonshires
- Laura O’Donovan, Senior Associate Partner, Baily Garner LLP
Thanks also to Angela Ferdinand-Sergeant, Schools Asset Management Team Leader, London Borough of Waltham Forest, for sharing invaluable insights from the council perspective in this event.
Read the write up of our fjrst panel discussion here.
Keep up to date
We’re now evaluating the insights, feedback and emerging needs identified through the pilot programme to inform the next phase of support for councils managing PFI contract expiry.
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Thanks to our partners Baily Garner, Devonshires, Equans, Grant Thornton and Rider Levett Bucknall for making this event series possible.
