NI Contributions Change – PFI contract implications
26th March, 2025
The upcoming increase in employer National Insurance contributions will have a direct impact on the budgets of public sector bodies and the cost of procuring certain goods and services. The costs of large outsourced public contracts such as FM services or PFI provided services are likely to be impacted by the change
The costs of large outsourced public contracts such as FM services or PFI provided services are likely to be impacted by the change.
We are aware that many PFI FM providers and project companies are seeking to pass on this cost increase to their public sector client, often citing a change in law as a justification for doing so.
PFI Project Agreements do entitle project companies and FM providers to seek a variation and an increase to project fees payable in certain instances however public sector clients should be aware that in many instances the PFI Project Co or FM Provider are not entitled to pass on costs arising as a result of a general change in law to the client. In each instance the terms of the project agreement and facilities provision contracts should be carefully checked to establish whether there is an entitlement to seek recovery of increased costs from the client.
When the project company/FM provider may be entitled to a variation as a result of a change in law, the company making the claim is required to provide full details of the likely implication(s) of the change. They are also usually required to mitigate the implications of any change in law to minimise the costs to the public sector client.
Ward Hadaway are happy to assist with review of any notifications received seeking a fee uplift as a result of the NI contributions increase and to advise of the merits of such claims on a bespoke project specific basis.
If you have any questions please contact Kerry Adcock or Melanie Pears.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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