PPP is back in the toolbox in England – But does it need sharpening up?

PPP returns in England for health and decarbonisation projects. Lessons from Wales’ MIM show how collaboration and co-investment can drive success.

A new chapter for PPP

As 2025 drew to a close, it was confirmed in the Autumn Budget that the new National Health Centres in England would be delivered through a combination of public sector investment and a “new model of Public-Private Partnerships (PPP)” and that PPPs would also be considered for projects that decarbonise the public sector estate. Good news. However, somewhat inevitably, those announcements coincided with loud criticisms of PFI in the headlines and I know I am not the only one that found myself exhaling hard – we have moved on from PFI guys!

Time for reflection

Nonetheless, it feels timely to reflect on how PFI/PPP models have evolved in the UK in recent years and why we must not stand still. Why we must keep learning and evolving and why we must celebrate the successes but also look at what we might do better next time. To that end, this short article seeks to distil key developments, successes and learnings from the most recent development and application of PPP in the UK – the Mutual Investment Model (MIM).

Introduction of MIM

MIM was introduced by the Welsh Government in 2017. The intent was not to reinvent the wheel, but to build on the experience of, and reflections on, the Scottish Non-Profit Distributing (NPD) model and England’s Private Finance 2 (PF2) model, which of themselves evolved traditional PFI/PPP. So what was different besides the acronym?

Welsh Government’s primary goals were to deliver essential infrastructure like schools, hospitals, and roads; ensure value for money through commercially balanced risk transfer, aligned with Welsh policy and classification rules; and to reduce transaction costs through development of a standard approach, reasonably acceptable to contractors, investors, funders and procuring authorities. What evolved was something that was seen as a “progressive” successor to PF2/NPD but which was comfortingly familiar to the market (a key factor in ensuring that the new model was bankable), with a distinctly Welsh identity.

Key features of MIM

• Public Sector co-investment – The opportunity for Welsh Government to take a minority equity stake (up to a maximum of 20% of issued share capital) in Hold Co and enhanced stakeholder involvement through the associated right to appoint a director to the Board of Project Co and Hold Co. In practice, investment has been made through the Development Bank of Wales. This was one of the features designed to tackle a key criticism of PFI/earlier PPP models, i.e., that there was little or no transparency, which often served to perpetuate the big, bad private sector profiteer perception and the ‘them and us’ mindset, without dealing in facts.
• Evolution based on learnings – MIM also tackled common causes of dispute or criticism in earlier PFI/PPP contracts, including payment mechanism reporting failures, handback, snagging, the independent tester role, scrutiny/assurance, reporting and inflexible change protocols.
• Hard FM services – On a value for money basis, services are limited to Hard FM only in MIM, meaning authorities can draw on capital budgets for peripheral services.
• Community Benefits – Delivering local community benefits is essential to Welsh Government’s revenue-funded infrastructure policy, helping it deliver the objectives of the Well-being of Future Generations (Wales) Act 2015.

Since the introduction of MIM, the A465 (Sections 5 and 6) MIM Dualling project, the 21st Century Schools WEP Strategic Partnering Delivery Model and the Velindre Cancer Centre MIM project have been closed.

What went well?

Full disclosure, I led the legal team advising Welsh Government on MIM so rather than take my view of it, I asked the Partnerships Bulletin editor, Paul Jarvis, to put this question to a panel of experts at a recent event in our London office. This is their view:

• Delivery of vital infrastructure – MIM has successfully delivered closed projects in what has been a volatile and challenging market, impacted by COVID-19, Brexit and war in Europe, including related market impacts such as inflation rises.
• Collaboration is key – Early market engagement and structured, pragmatic dialogue, with a collaborative, agile and solution-driven approach helped deliver better outcomes.
• Public sector co-investment – Public sector ‘skin in the game’ builds trust, collaboration and resilience in the partnering model.
• Standardisation helps efficiency – The development of standard agreements (with project-specific tailoring guidance) streamlined delivery, improved compliance and focused dialogue on the asset itself.

Scope for further evolution?

On the flip side, Paul also asked our panel what would they like to see in the future of PPP procurement and what might benefit from further evolution?

• Future proofing – Probably the single, most reiterated point made by our panel was not one aimed at the PPP model itself, but on the conditions needed for successful delivery looking forward. Without a robust, co-ordinated and clear pipeline of projects across the UK, it was felt supply chain challenges, appetite for risk, market confidence and industry expertise would inevitably continue to challenge the successful delivery and optimum value for money of projects.
• Project suitability – Related to pipeline was a general discussion around project suitability. It was noted that one of the unique selling points for PPP was ‘on time/on budget’ delivery but that the conditions needed for securing value for money deals in a fixed price environment meant that PPP is not generally suited to overly complex projects or projects that are not market ready.
• Risk allocation – Asked whether standard risk allocation needed to be revisited in the current market, participants felt that a robust pipeline would help counteract some of the reticence around risk in the market and the approach should generally still be guided by the founding value for money principles of ‘risk sitting with the party best placed to manage it’. It was acknowledged that statistical treatment may also ultimately impact flexibility of approach on risk, where an “off balance sheet” ruling forms part of the business case assumption and the model/policy approach to, for example equity investment influencers, mean there is limited bandwidth for further influencers on treatment.
• Community benefits – Community benefits on MIM were seen as a positive opportunity to engage with and benefit local communities and to showcase private sector innovation but the panel noted requirements must be realistic, measurable and aligned with local needs, service type and market conditions.
• Supply chain appetite – Another ongoing area of challenge in the PPP market has been supply chain appetite for FM services. In a world where the balance between risk and reward has moved and market confidence has been dented through the operation of some older style contracts, participants queried whether it was time for procuring authorities to revisit the traditional approach to the payment mechanism and move towards more of a core focus on availability of the asset for use.

The bottom line

So, what does this analysis tell us about the current fitness for purpose of PPP in the UK? Whatever the trending acronym might be, PPP still remains a valuable tool to support the delivery of our infrastructure needs in the UK and the industry continues to challenge and evolve its approach. However, there is a fragility to the positive mood music. PPP needs a willing market standing ready so, as with all good tools, it should be kept in regular use through planned and targeted operation and maintenance, for maximum effect.

Want to learn more?

If you’d like to discuss PPP models or learn more about our experience advising on MIM, please contact Lillian or visit our Infrastructure webpage.