Scotland’s next PPP market will not look like the last one
Scotland is considering a new generation of privately financed infrastructure. Alongside active management and expiry of the established PPP/PFI estate, the Scottish Government (SG) is considering the Mutual Investment Model (MIM) as a potential route for a new generation of privately financed public infrastructure.
However, this is not a return to the PPP market of the 1990s and 2000s. The emerging investment model and SG’s 2027-2037 infrastructure strategy point to a more selective approach, with programme scale, whole-life performance and portfolio governance set to determine which propositions are credible.
The infrastructure plans prioritise making better use of existing assets and progressing new schemes through clearer development stages, bringing in private finance where it can increase capacity or accelerate delivery. Any future privately financed procurement using MIM will still require robust business-case, affordability, value for money and market testing.
For businesses considering participating, the important question is not simply whether there is a new pipeline. It’s whether their funding, delivery and operational models are suited to a programme in which whole-life performance, affordability and consistency across multiple schemes are likely to matter as much as construction capability.
New investment and healthcare MIM
The most developed near-term opportunity is the proposed MIM programme for primary and community healthcare. The current intention is for a Private Sector Delivery Partner to deliver the pipeline, with the procurement process due to start by summer 2027.
A programme covering multiple schemes could create efficiencies through standardisation and repeat delivery. It also raises the stakes: inconsistent pricing, governance or risk assumptions across the portfolio could become expensive weaknesses rather than isolated project issues.
For public bodies, the key issues will include affordability, accounting and classification, procurement strategy, governance, stakeholder engagement, service continuity and demonstrable whole-life value.
For private participants, the priorities will be procurement timing, consortium formation, financeability, construction and operational interfaces, performance deductions, inflation, lifecycle replacement, energy performance, change control and handback.
Positive market signals
More than £500 million: the proposed investment gives the market enough scale to justify early work on consortium structure, capacity and delivery models
Three named pilots: Port Glasgow, East Calder / East Livingston and Cowdenbeath / Lochgelly provide tangible reference points for early market engagement, operational scoping, investor testing and consortium discussions
An initial tranche of 12 schemes: this creates the basis for standardised procurement, portfolio-level efficiencies, consistent lifecycle assumptions, scalable service delivery and repeat deployment across the programme.
Construction capability alone will not be enough
The opportunity extends beyond designing and building new facilities. Private capital, facilities management, lifecycle delivery, energy performance, compliance, technology and long-term asset management will all have a part to play.
The stronger propositions are therefore likely to be those that connect finance, construction and long-term operation rather than treating them as separate components.
Potential participants should start testing four questions now.
Assess the priority MIM schemes, likely NHS board requirements, community care interfaces, capital requirements and opportunities for operational delivery.
Determine which investors, contractors, facilities management and lifecycle providers, designers, energy specialists, technology providers and local delivery partners are needed to create a credible proposition.
Test the capital structure, payment mechanism, construction and lifecycle risks, performance deductions, inflation exposure, workforce and TUPE assumptions, utilities, compliance requirements, change control and eventual handback.
Reliability and price will remain fundamental, but bidders should also consider how their models support clinical continuity, community benefit, net zero commitments and whole-life asset performance.
The important point is to test these assumptions before procurement crystallises. Problems at the interfaces between funding, construction and operation become much harder to resolve once consortium structures and commercial positions have been established.
The existing PPP estate
The emerging pipeline will not replace the workload created by the existing PPP estate. The two markets will run in parallel, competing for some of the same capital, operational expertise and management capacity.
Many Scottish PPP/PFI projects are now mature and an increasing number are approaching expiry. That is driving activity around asset surveys, lifecycle sufficiency, contractual compliance, variation backlogs, deductions, refinancing, dispute avoidance and handback planning.
Public authorities should establish their desired post-expiry operating model early.
Project companies, funders and subcontractors should test liabilities, evidence asset condition and align remediation programmes with contractual requirements.
Practical priorities
Public sector bodies should confirm strategic need and pipeline maturity; develop proportionate business cases; plan procurement, governance and approvals; test affordability and market capacity; and begin expiry planning well ahead of contractual deadlines
Private sector bodies should use the four questions above to build a Scottish-specific proposition around affordability, resilience, net zero and community benefit. That means mapping the pipeline and likely partners, testing funding, construction, FM and lifecycle assumptions, and identifying risk that cannot be priced efficiently
For investors, bankability and value for money need to be tested alongside funding structures, lifecycle obligations, inflation exposure, construction and FM pricing, and the interfaces between NHS Boards, local authorities and community services
All parties should invest early in reliable asset data, open-book commercial analysis and clear decision-making. Successful delivery will depend on realistic risk allocation and active contract management throughout the asset life
The outlook for the PPP market
The next phase will combine selective private investment in new programmes with the difficult work of managing and transferring the existing estate. Businesses that treat these as separate markets may miss the capacity, risk and delivery pressures connecting them.
Before formal procurement begins, potential participants should establish whether they can add value across a programme rather than a single asset, with the necessary partners and workable funding, delivery and lifecycle assumptions.
The new pipeline may attract attention, but weaknesses in the existing PPP/PFI estate won’t wait. Organisations should establish whether asset condition, contractual evidence and handback planning are keeping pace with approaching expiry dates.
How Freeths can help
Freeths gives public and private sector participants a practical route into the Scottish opportunity: local MIM and procurement insight, UK PPP/PFI operational-phase experience, risk allocation expertise and commercial judgement on bid strategy, service scope, lifecycle pricing and long-term asset performance.
Scottish market insight: Richard Lockhart brings experience across Scottish PPP, MIM, procurement, funding, subsidy control, governance and regulation, including experience as Scottish Futures Trust General Counsel and with Taycare Health Limited.
Operational PPP/PFI depth: James Larmour brings more than 20 years’ experience across PPP/PFI, project finance, healthcare PFI variations, operational-phase change, expiry settlements, refinancing and strategic partnering.
Freeths can support participants through the full programme: from opportunity mapping, consortium formation and partner selection to procurement and funding strategy, bid structuring and mobilisation. Construction and FM subcontract terms, performance regimes, lifecycle obligations and risk allocation connect that initial work to operational change, refinancing, expiry and handback.
The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.
Related expertise
Contact us today
Whatever your legal needs, our wide ranging expertise is here to support you and your business, so let’s start your legal journey today and get you in touch with the right lawyer to get you started.
Get in touch
For general enquiries, please complete this form and we will direct your message to the most appropriate person.