Recent headlines from Stoke on Trent highlight a growing problem for schools and local authorities in disputes over the condition of assets (schools) and responsibilities upon handback, under expiring Project Finance Initiative (PFI) contracts.   

PFI projects have delivered essential public assets, but many early contracts, such as those involving schools in  Stoke on Trent, include vague handback and expiry terms. As these agreements wind down, local authorities may face hefty, unexpected bills to restore assets to the required standard. 

This insight sets out the current dispute in Stoke on Trent and the lessons local authorities can learn. 

The Dispute 

The schools involved in this dispute in Stoke on Trent claim that the private firm has not adequately maintained or repaired building issues, including damp, structural problems, crumbling plaster and infrastructure problems.   

• 42 of 88 schools are now withholding payments due to the alleged lack of adequate maintenance and rectification.  
• Less than 1% of the sums payable to the Project Company have been withheld since 2014 and no compensation has been recovered for delays. 
• Contracts expire in October 2025, but surveys reveal millions are needed for urgent repairs. There may not be sufficient time and funding to complete the work before the handback deadline. 

With nearly 600 similar contracts for schools and hospitals nearing the end of their terms, this case is a warning sign for authorities across the country. 

Key lessons for Local Authorities  

This dispute highlights vital lessons for authorities managing PFI contracts: 

• Early, thorough contract reviews: Review expiry and handback clauses now to ensure they’re clear and enforceable. Early renegotiations can prevent disputes in the future. 
• Robust variation management: Establish clear, documented processes for handling contract changes, backed by regular audits or surveys of the assets. 
• Stronger contract management: Build in-house expertise to oversee long-term contracts effectively. Retaining corporate knowledge is important. 
• Open communication: Maintain regular, productive dialogue with PFI partners to foster trust and resolve emerging issues before they escalate. 
• Use your contractual rights: Understand and apply your contractual rights and levers (deductions) to incentivise the Project Company to resolve the issues and to protect public assets and finances. 

How Capsticks can help  

Capsticks specialises in supporting local authorities through the complexities of PFI disputes. From contract reviews and renegotiations to full-scale dispute resolution, we offer strategic, practical advice tailored to your situation. We understand the pressures councils face and work to minimise financial risks, secure assets, and keep services running. 

With PFI expiries accelerating, now is the time to act. Early intervention can mean the difference between a smooth handback and an expensive, disruptive dispute. If your authority is approaching the end of a PFI agreement or worried about one, we’re here to help you navigate the challenges ahead. 

Please speak to Dylan Young to find out more about how Capsticks can help.