Ministers are hampering progress towards their own objective of increasing private investment in UK infrastructure at a good price, a new report finds.
Published today by the Institute for Government, How to get better private finance deals for infrastructure argues that if the Government wants to increase the volume of private investment in infrastructure it needs to publish a clear plan for future projects that addresses investors’ concerns about who will ultimately pay for them.
The only information available to investors is the National Infrastructure and Construction Pipeline which lacks critical funding information and the clear timelines that are vital for investors. The Government announced in the 2016 Autumn Statement that it would publish plans for new private finance projects, but more than a year later these plans have yet to materialise.
The report argues that this is eroding investor confidence. Persistent uncertainty will reduce the number of investors willing to bid, which will lead to inferior contract terms and ultimately higher costs for taxpayers and consumers.
The report also finds Whitehall needs more civil servants with the commercial skills to negotiate and manage private finance deals effectively. Recent improvements have led to better private finance deals like the Thames Tideway Tunnel, but current civil service capability is not sufficient to meet the Government’s objective of substantially increasing private investment in infrastructure.
The Government must increase the number of project finance specialists able to manage the specific contractual issues that come with private finance.
Nick Davies, Associate Director at the Institute for Government and report author, said:
“Successive governments have struggled to agree and manage private finance contracts that provide good for value for money for taxpayers and consumers.”
“If the Government is to meet its objective of securing more private investment in infrastructure at a good price, it must address investors’ concerns about the upcoming pipeline. The Chancellor promised to publish a clear plan a year ago and his failure to do so has damaged investor confidence. The Infrastructure and Projects Authority must also further develop the civil service’s in-house commercial skills if they are to be successful in realising the Government’s ambitious objectives for UK infrastructure.”
Notes to editors
The full paper - How to get better private finance deals for infrastructure - can be found on our website (from 00.01 WED 17 JAN).
The Institute for Government is an independent think tank that works to make government more effective.
For more information, please contact email@example.com / 07825 021 538.