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Labour ministers prefer to refer to the PFI using the more generic and less politically charged term "public-private partnership" or PPP.
The term PPP describes any private sector involvement in public services including the transfer of council homes to housing associations using private loans, and contracting out services like rubbish collection or hospital cleaning to a private companies.
The PFI, the most well-known form of PPP, refers to a strictly defined legal contract for involving private companies in the provision of public services, particularly public buildings.
Under a PFI scheme, a capital project such as a school, hospital or housing estate, has to be designed, built, financed and managed by a private sector consortium, under a contract that typically lasts for 30 years.
The private consortium will be regularly paid from public money depending on its performance throughout that period. If the consortium misses performance targets, it will be paid less.