IFG - Ministers are undermining their own efforts to increase private investment in infrastructure
Ministers are hampering progress towards their own objective of increasing private investment in UK infrastructure at a good price, a new report finds.
Published 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
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.
Latest News from
JRF - Nearly one in three adults out of work as Northern Ireland makes no progress on poverty in a decade20/02/2018 13:35:00
Almost one in three working-age adults in Northern Ireland are out of work, as a new report shows how Northern Ireland’s employment rate is lagging behind the rest of Great Britain.
Civitas - Boost productivity with a new national investment bank20/02/2018 12:35:00
A state-backed investment bank should be set up to plug the shortfall in lending to small and medium-sized businesses and help tackle the challenge of poor productivity in the UK, a new Civitas report urges.
IFS - Just 1 in 4 middle-income young adults own their own home - down from 2 in 3 twenty years ago20/02/2018 11:35:00
Whether they are rich or poor, today’s young adults are much less likely to own their own home than those in their place one or two decades ago. But the biggest decline in homeownership has been among young adults with middle incomes. In 1995–96, 65% of 25 to 34 year olds with incomes in the middle 20% for their age owned their own home. By 2015–16, just 27% of that group owned their own home.
Demos - New research sets out how a better WCA is possible20/02/2018 10:35:00
Disabled people, doctors and experts agree that the Work Capability Assessment (WCA) – the assessment for out-of-work disability benefits – is broken. A new report from academic Ben Baumberg Geiger and Demos think tank sets out a clear vision for how a better WCA is possible.
JRF - Government plans fall short of 600 extra low-cost rented homes a week needed20/02/2018 09:35:00
New analysis from the independent Joseph Rowntree Foundation (JRF) shows how nearly 600 additional low-cost rented homes need to be built every week in order to fix the broken housing market and help low incomes families escape poverty.