Councils in UK “withheld just £32m over underperforming PFI deals” in 2017

Local authorities in the UK withheld only an estimated £32m on underperforming PFI contracts last year, it has been claimed.

Law firm Collyer Bristow said that this amount was an estimate based on data received from 260 out of 428 local authorities in response to a freedom of information request.

It added that almost half of the sum (£14m) was held back by just one local authority, Birmingham City Council, which has been involved in a long-running dispute with Amey over a road maintenance contract. 

The £32m withheld represents just 0.3% of the £10.6bn of annual payments to all PFI providers (across the public sector), the law firm said.

The amount withheld by councils the previous year was just £24m.

Collyer Bristow claimed councils were often reluctant to withhold payment as they were concerned about the legal implications of doing so. “However, PFI contracts will invariably have some sort of contractual mechanism to allow payments to be reduced for failures in performance.” 

Catrin Rees, Senior Associate in the firm’s construction team, said: “Councils -and ultimately taxpayers- should not be paying for services if they are not being delivered by PFI contractors.

“However, if local authorities feel that their providers may not be holding up their end of the agreement, then it’s obviously sensible to consider revisiting the original agreements and taking advice on whether there are grounds to reduce or withhold payments to get a better service for taxpayers. 

“Undeniably, PFI contracts can work well for local authorities, contractors and tax payers where parties cooperate and have realistic expectations of each other.”