The UK has historically delivered social infrastructure through the Private Finance Initiative (PFI) and the Public Private Partnership (PPP) models.  

In Scotland, the delivery model was adapted to cap the returns to the private sector and to include more public sector oversight via the Non Profit Distributing model (NPD) which was developed by the Scottish Futures Trust, In addition, the Hub programme was developed, splitting Scotland into five geographical hub territories to deliver social infrastructure projects in their own regions. The success of Scotland’s Hub Programme has been recognised in a recent independent evaluation report, (March 2021) confirming that since its establishment ten years ago, it has delivered in excess of £2.2bn investment in around 200 projects in Scotland.

The current UK government has made it clear that it no longer wishes to use these historical delivery models and in Scotland the Hub programme continues but only to support capitally funded projects – i.e. those that are funded directly by the local authorities own capital budgets – there is no private finance leverage. The primary market for social infrastructure is therefore currently in abeyance whilst other delivery models are considered such as the Mutual Investment Model currently being trialled in Wales.

Our team has advised on £500m of hub projects and £400m of NPD projects in Scotland as well as projects through the rest of the UK and internationally.

Whilst the primary market has all but ceased, the secondary market remains active and buyout has been an area of strategic focus for Johnston Carmichael.

We have a well-established and market-recognised infrastructure advisory and compliance team. We act for around 22 sponsors, with over 180 assets (over 450 project vehicles) covering the full spectrum of infrastructure categories including Education, Health, Emergency Services and Roads. This experience, combined with our multidisciplinary approach, means our clients get the most up-to-date and pragmatic advice from experts with deep-seated sector knowledge.

Our experience, reputation and expertise coupled with our existing client base (which includes some of Scotland’s largest infrastructure businesses), places us at the heart of this dynamic and vibrant sector. We are familiar with the key issues involved in hub, NPD, PFI/PPP, including IFRS, FRS102, ESA10, fair value valuations, listed debt, interest rate and RPI swaps and lifecycle profiling.

We have developed a reputation as the go-to firm for audit and tax compliance services to infrastructure funds and owners of portfolios of assets. As our experience within the PFI sector has grown we have developed a dedicated PFI audit work programme. This increases both audit quality by driving consistency within our testing approach and audit efficiency by ensuring our staff has familiarity with the audit approach and the key aspects of PFI audit. Each member of our PFI sector team is also required to complete sector-specific training sessions each year.

Our audit approach is top-down and risk-focused. It is tailored to respond to our understanding of our clients’ business and strategic objectives, together with the associated business and financial statement risks. This enables us to focus our efforts on the issues that matter rather than those that do not. The effective alignment of our audit to our clients’ business risks results in a fully tailored approach to PFI audit, focusing on the key areas of interest such as:

  • revenue recognition (including interest)
  • lifecycle accounting
  • management override of internal controls
  • carrying value of debt
  • valuation of derivatives
  • valuation of investments
  • compliance with listing rules
  • LIBOR reform
  • FRS 102 amendments

Audit and tax compliance

The firm’s centre of PFI/PPP compliance service expertise is based in our Edinburgh office. We continue to actively recruit and train staff within this area, targeting portfolios of SPVs.  Members of our team have advised a range of clients.


Jamie Davidson

Corporate Finance Director

Jamie Davidson

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