Following the review of evidence submitted on PFIs, in 2012 the Coalition government introduced a new initiative - Private Finance 2 (PF2). PF2 is an amended form of PFI. The scheme would continue to draw on private sector expertise and finance but would also address previously raised concerns with PFIs. PF2 is also expected to respond to changes in the economic context, and aims to increase financial transparency, hence enforcing greater accountability for project delivery and operation. The Coalition government planned to achieve greater levels of transparency and decision making by holding a minority equity stake in the project, of between 25% and 49%.39 Other distinctions from traditional PFI include a limitation on the tendering phase to 18-months and the removal of soft services (such as cleaning and security), management services and other services (such as IT, reception, telephone services) from projects. PF2 is also expected to be simplified and faster generally, streamlining the procurement process by introducing new standardised documentation. 40

Since its introduction in 2012, only a small number of projects have been agreed via PF2, the first of which was the Priority School Building Programme (PSBP), a programme set up to address the needs of the schools in most urgent need of repair. The PF2 programme consisted of 46 schools split into five batches, of which three were agreed in March 2015, and the remaining two batches are anticipated to be agreed by the end of 2015. The total funding requirement is £700 million. Other PF2 projects that have reached financial close include the Papworth Hospital - New Cardiothoracic Centre, Hull City Council Extra Care Housing (both projects procured by Department of Health), and housing projects procured by Department for Communities and Local Government.

PF2 was designed to deal with limitations of PFI, allow greater transparency and reliability