Private Finance Initiatives (Pfis) Definition

A Private Finance Initiative (PFI) is a way of funding public sector projects using private sector investment.

In a PFI, a private company finances, builds and maintains an asset, such as a new hospital or school, and then leases it back to the public sector over an agreed period of time.

PFIs were introduced in the early 1990s by the Conservative government as a way of encouraging private sector involvement in the delivery of public services.

Since then, PFIs have been used to finance a wide range of projects, from hospitals and schools to prisons and roads.

Around £300 billion has been invested in PFIs in the UK since they were first introduced.

Critics argue that PFIs are more expensive than traditional forms of public sector borrowing, and that they transfer risk from the public to the private sector.