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The Treasury’s new social-infrastructure public-private partnership (PPP) model is currently being developed for NHS Neighbourhood Health Centres (NHCs). It is an infrastructure and facilities arrangement—not a plan to hand NHS clinical services to private operators. Public capital remains central, while a private partner could help finance, build, maintain or manage some new-purpose facilities where a project proves affordable and better value over its life than an equivalent publicly financed option.
The model was announced in the November 2025 Budget as part of the NHS Neighbourhood Rebuild Programme. As of November 2026, government has set design principles and governance arrangements, but has not published final contract terms, payment formulas, contract lengths, risk allocations, a procurement timetable or the first selected centres. Any explanation that supplies those details is describing a proposal, not an agreed national template.
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The published commitment is narrower than the phrase “social infrastructure PPP” suggests. The defined application is NHS Neighbourhood Health Centres: local facilities intended to bring together primary, community and related health services in places where existing provision is inadequate, fragmented or unsuitable. The 2025 Budget and the Department of Health and Social Care’s 10 Year Capital Plan for Health and Social Care place the work within the wider NHS Neighbourhood Rebuild Programme.
That does not create a settled PPP mechanism for every school, hospital, prison or other public asset. The wider infrastructure strategy allows government to explore private finance in limited circumstances, including some primary and community health infrastructure and public-estate decarbonisation. Each use would still require its own business case, affordability assessment and value-for-money decision.
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Projects may involve upgrading or repurposing buildings already owned by the public sector as well as constructing new facilities. The emerging PPP is most relevant to new, purpose-built centres, where a long-term arrangement could combine public funding with private-sector finance and delivery. Public capital is not being withdrawn from the programme.
NISTA—the National Infrastructure and Service Transformation Authority—is leading development of the model with DHSC co-design. NISTA’s role is to develop a repeatable approach to infrastructure delivery; DHSC brings responsibility for health-service requirements, clinical operating context and local NHS priorities.
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How will the new NHS PPP model work?
In outline, a local NHS need would be identified first, followed by an assessment of whether a new or altered centre is required. Government would then compare delivery and financing options, including conventional public procurement. Only a project that is affordable and demonstrates value for money should proceed as a PPP.
- Define the local requirement. NHS organisations consider existing buildings and services, population needs and the case for additional or differently combined neighbourhood provision. Need is locally driven rather than determined by a centrally imposed list of centres.
- Specify the asset and outputs. The authority would set requirements for capacity, clinical adjacencies, accessibility, energy performance, digital connectivity, maintainability and availability. A specification based on measurable outputs is important because a private partner can only be held to risks and results that the contract defines clearly.
- Develop the business case. Costs, timetable, affordability, risks, market capacity and whole-life consequences are assessed. The Green Book generally expects a public-sector option at shortlist stage so a PPP can be compared with a public-financed project of equivalent quality, output and maintenance.
- Test the market and procure. Further market engagement is expected as NISTA and DHSC refine the model. Competitive procurement would establish whether suppliers can offer credible finance, construction, facilities management and maintenance arrangements at an acceptable price.
- Contract and monitor performance. If approved, the public authority would pay according to an agreed mechanism tied to availability, condition and other service outputs. The exact mechanism has not been published, so it is not possible to state whether it will resemble a traditional unitary charge, a staged payment or another structure.
The announced design aims are a simpler and more transparent payment mechanism, enough flexibility to accommodate changes in health services, and stronger oversight of asset condition and maintenance, including the use of digital tools. These are objectives, not final clauses. They indicate what the model is intended to improve but do not prove that a future contract will deliver those improvements.
Will private companies run NHS services in neighbourhood health centres?
No. The stated boundary is infrastructure. NHS clinical services delivered from the centres remain publicly delivered. In a parliamentary answer, Health Minister Karin Smyth said the model is “about delivering the infrastructure to support the delivery of neighbourhood services” and is not using private companies to deliver NHS clinical services. The full Department of Health and Social Care answer is the clearest statement of that distinction.
A private consortium could therefore have responsibilities such as designing and constructing a building, arranging some project finance, maintaining the fabric and systems, or providing facilities-management services. It would not set clinical policy, employ NHS clinicians by virtue of the PPP, or replace NHS accountability for patient care. The eventual contract must make interfaces explicit: who controls access, infection-control requirements, clinical equipment, data systems, security, utilities and urgent repairs.
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This boundary matters commercially and politically. A facilities contract can still affect how reliably services operate, but it is different from outsourcing the provision of GP, community or other NHS treatment. Describing the proposal as “privatising neighbourhood healthcare” would go beyond the published scope.
Is the new PPP just PFI again?
Government says it is not bringing back the Private Finance Initiative (PFI). It describes the proposal as an infrastructure model that draws on earlier approaches while attempting to apply lessons from them. That assurance does not settle whether a particular future contract will have similar economic or operational features; the comparison must be made from the actual payment, risk and termination provisions.
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PFI typically used long contracts under which a private consortium financed, built and maintained an asset in return for public payments over time. Critics highlighted expensive private capital, rigid contracts, weak risk pricing and difficulty changing services. The House of Commons Committee of Public Accounts reported that past PFI use was affected by inefficient procurement, poorly drafted contracts and weak management of risk transfer. It also criticised the incentive to keep liabilities off the public balance sheet and noted that government lacked a comprehensive evidence base for choosing financing models project by project. Its 2025 report is scrutiny of historical practice, not proof that every PFI project failed.
The proposed model is intended to differ through clearer payments, greater service-change flexibility, closer maintenance oversight and more transparent fiscal treatment. Whether it succeeds depends on details that remain open: the contract’s duration, indexation, refinancing rules, compensation on termination, handback standards, step-in rights, information requirements and how risks are priced. A new label cannot by itself change the economics.
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What does “on balance sheet” mean for these PPPs?
The Budget says NHC PPPs will be budgeted as if they are on the public balance sheet. That treatment supports transparency and fiscal sustainability, but it is not a finding that private finance is cheaper or that a project has passed a value-for-money test.
Accounting classification and economic appraisal answer different questions. Classification records how the public finances should present the arrangement. Value-for-money appraisal asks whether the public receives the required asset and services at lower whole-life cost, after considering financing, construction, operating, maintenance and residual risks. A project can be treated as on balance sheet and still be worth considering as a PPP—or be rejected because public procurement offers better value.
The 2026 Green Book states that private finance might provide higher value for money only when the benefits of risk transfer and delivery efficiencies outweigh the higher cost of private capital. Government borrowing is usually cheaper than private borrowing. The case for a PPP therefore has to come from credible, measurable advantages, not from an accounting presentation or an assumption that private delivery is automatically more efficient.
How will government decide whether a PPP offers value for money?
The relevant comparison is not “public good, private bad” or the reverse. It is a public-sector comparator and other realistic delivery options against the same outputs, quality and maintenance standard.
| Question | What an appraisal should test |
|---|---|
| Whole-life cost | Private finance charges, construction, facilities management, maintenance, insurance, lifecycle replacement, taxes, transaction costs and the cost of public borrowing over the asset’s life. |
| Risk allocation | Whether the private party can actually control and price construction, performance, maintenance, energy or technology risks, rather than merely receiving a notional transfer. |
| Flexibility | How easily space, layouts, opening hours, technology and service capacity can change as local health needs evolve, and what each change would cost. |
| Delivery capability | Market capacity, supplier resilience, construction complexity, timetable confidence and the public authority’s ability to manage the contract. |
| Asset condition | Whether maintenance obligations, inspections, digital records, lifecycle funding and handback requirements protect the building throughout the term. |
| Fiscal obligations | Long-term payment commitments, contingent liabilities, termination compensation and exposure if demand, inflation or suppliers’ finances change. |
The Green Book’s framework also asks whether outputs are measurable and whether the private sector has the skills and incentives to manage the relevant risks. If a requirement is likely to change frequently, a rigid long-term contract may destroy value even if its initial construction price looks attractive. Conversely, a well-specified asset with measurable availability requirements and manageable lifecycle risks may be more suitable for a structured partnership.
Appraisal should use sensitivity analysis rather than a single optimistic forecast. Important scenarios include construction delay, inflation, interest-rate changes, refinancing, contractor failure, lower-than-expected use, major building-system replacement and early termination. The public-sector comparator must include realistic public-sector costs; making the public option artificially expensive would invalidate the comparison.
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What remains undecided?
As of November 2026, the reviewed official material does not state:
- the number or locations of NHCs;
- the first projects to enter procurement;
- contract duration or extension options;
- the payment formula, indexation or deductions;
- which construction, demand, maintenance, technology and residual-value risks would transfer;
- the required private-finance share or public-capital contribution;
- the procurement timetable or standard contract;
- expected savings, a programme-wide cost, or a forecast number of private-sector jobs; or
- a final comparison with PFI or any other financing model.
DHSC has described the feasibility programme business case as a strategic outline business case and said it did not plan to publish it. NISTA is expected to continue design work with DHSC and undertake further market engagement. Readers should therefore treat later announcements about contract templates, selected centres or payment rules as potentially material updates to this explanation.
What are the main risks for taxpayers and NHS organisations?
Higher financing costs. Private capital normally costs more than government borrowing. A PPP must generate enough delivery, maintenance or risk-management benefit to offset that premium.
Risk transfer that is only theoretical. If the public authority ultimately bears the consequences of design defects, delays, demand changes or supplier failure, pricing a risk as “transferred” does not make it so. Contracts need enforceable obligations, usable data and credible remedies.
Loss of flexibility. Neighbourhood care is expected to evolve. Space that works for one service mix may need to support another. Change-control prices, minimum-payment commitments and termination provisions can make adaptation expensive.
Contract-management capacity. A sophisticated PPP requires commercial, technical, clinical, legal and financial oversight for decades. Under-resourced management can allow poor maintenance, disputes or unnoticed value leakage.
Market concentration and failure. If only a small number of firms can bid, competition may be weak. A major contractor or facilities provider failing during construction or operation could leave the NHS with disruption and emergency costs.
Maintenance and handback. Apparent savings can be undermined by deferred lifecycle work. Digital asset records, condition surveys, inspection rights, funded replacement schedules and clear end-of-term standards are essential.
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These are reasons for disciplined appraisal and contract design, not automatic reasons to reject every PPP. The Green Book’s central test is whether benefits and manageable risk transfer outweigh higher private-capital costs over the whole life.
What does the model mean for construction and infrastructure suppliers?
Suppliers should expect the opportunity, if it proceeds, to be closer to an integrated infrastructure commission than to a contract for NHS clinical operations. Potential work packages could include design, construction, building-services systems, energy performance, digital building management and long-term facilities maintenance. The precise scope will depend on procurement documents that have not yet been published.
Early market engagement is likely to test whether firms can provide reliable lifecycle data, open-book cost information, supply-chain resilience and workable responses to service change. Bidders will need to show not only a construction price but also how they will maintain safety-critical systems, manage obsolescence and meet measurable availability and condition standards.
Public authorities should avoid transferring risks that suppliers cannot control. Clear site information, realistic planning assumptions, defined clinical interfaces and a fair change mechanism can reduce the premium bidders add for uncertainty. They should also preserve continuity if a consortium fails, including step-in rights, access to records and the ability to appoint replacement providers.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How should local NHS bodies and communities follow the programme?
Local need is the starting point, so communities should look for evidence that proposed centres complement—or replace only where justified—existing services. A new building is not automatically better than refurbishing an accessible facility. The relevant questions are whether the project improves access, supports the intended care model, fits local workforce capacity and remains affordable when operating and maintenance costs are included.
NHS bodies can make the eventual decision more credible by publishing the service need, options considered, affordability constraints and the outcome of the public-sector comparison when disclosure rules allow. They should distinguish capital funding from recurring clinical budgets and explain who will be accountable for defects, closures, service changes and the building at the end of the contract.
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What evidence will show whether the model is working?
Success should be judged by outcomes, not by the number of contracts signed or the amount of private capital raised. Useful measures include completion against an approved cost and timetable, building availability, safety and condition, energy performance, speed and cost of agreed service changes, maintenance backlogs, supplier resilience and the effect on access to neighbourhood services.
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Evaluation quality is itself a concern. The Public Accounts Committee reported that 68% of infrastructure and construction major projects had a high-quality evaluation plan; across all major projects, 63% had at least some evaluation plan and 34% were judged high quality. Those figures describe plans, not outcomes or PPP performance. For NHCs, baseline data and a published evaluation approach would make it possible to test whether the model delivers better whole-life value than the public alternative.
What is the practical bottom line?
The Treasury’s proposal is a developing NHS facilities-delivery model, not a completed scheme for all social infrastructure and not a return to private provision of NHS care. It could combine public capital with private finance and delivery for some new neighbourhood health centres, while upgrades and repurposing remain part of the programme.
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Frequently Asked Questions
When will the first NHS neighbourhood health centre PPPs be procured?
No procurement timetable or first project list had been published in the reviewed material as of November 2026. NISTA and DHSC were still developing the model and undertaking market engagement, so a future notice or business-case approval—not the Budget announcement itself—will establish the timetable.
Can an existing NHS building be included in the PPP model?
Yes. The programme can upgrade or repurpose existing buildings as well as build new facilities. The emerging PPP is primarily relevant to new-purpose assets, but the choice should follow the local options appraisal rather than an assumption that every centre needs a new building.
Who owns an NHS neighbourhood health centre during and after a PPP contract?
The reviewed sources do not specify ownership, lease or handback arrangements. Those provisions, along with termination compensation and asset-condition standards, must be set out in the eventual contract; they cannot be inferred from the announcement that projects will be budgeted on balance sheet.
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There is no published programme-wide saving estimate. Private finance generally carries a higher capital cost, so any saving would have to come from demonstrable delivery, maintenance or risk-management efficiencies that exceed that premium over the asset’s life.
What should a contractor prepare before bidding for an NHC project?
A potential bidder should be ready to evidence whole-life cost control, supply-chain resilience, maintenance systems, digital asset information, energy performance and the ability to accommodate service changes. The final requirements will depend on the procurement documents and should not be assumed from the current policy outline.
