What PFI actually was
PFI stands for Private Finance Initiative. It was a way of getting a hospital, school, road or military asset built without the government paying the full upfront cost directly. A private consortium financed and ran the deal instead, while the state signed a contract to keep paying over decades. PF2 was the later version of the same basic model.
How it worked: instead of the government paying to build something directly, a private firm built and managed it, and the government then repaid them over 25 to 30 years, a bit like a mortgage, but often on very unfavourable terms. The bill was not just the build cost either. It usually bundled in finance, maintenance, operations and profit.
The key sting is the gap between what the asset was built for and what taxpayers are scheduled to hand over. That is the part most people never see in one place. A project can be built for one number, then carry a much fatter repayment trail across decades of budgets.
A private project company puts the asset up first, then the public sector signs up to pay it back over a long contract.
The public does not just repay the build cost. The contract bill piles on finance, maintenance, operations and profit for years, which is why the payback number can dwarf the original capital value.
The scandal is not just that these deals existed. It is that the public asset value and the taxpayer payback are often nowhere near each other, and the burden can still sit on budgets decades later.