Infrastructure delivery models

In the second interview of our Perspectives on Infrastructure series, Daniel Woolf of the Confederation of British Industry gives his thoughts on the current state of the UK infrastructure market and the ways in which the private sector can assist in building an infrastructure environment that is fit for the 21st century.

Daniel’s point regarding finance delivery models is an important one. The Government has made clear that, in England at least, revenue financing along the lines of PFI/PF2 is not on its agenda. It remains to be seen what approach the Government will take to replacing this model (and indeed there are various other models that the Government might choose from or use as inspiration). In our view, there are two important considerations here:

•  Clarity is essential, both as regards the decision-making process as well as the operation of the model. This should include a sensible risk allocation between the public and private sectors, which allows an appropriate level of return to be made on their investment whilst ensuring that the project delivers for the public; and

•  There is no need to adopt a “one size fits all” model for UK infrastructure. For example, the regulated asset base model has proven itself to be adaptable to a number of different areas of infrastructure, for example on the Thames Tideway Tunnel scheme. What is important is to adopt (and to use Daniel's phrase "champion") a model which works for the relevant asset class and the size of the transaction, so as to ensure that Government and investors have an appropriate contractual platform on which to deliver the UK’s infrastructure needs.

those barriers included political uncertainty, the perception of politicised regulators, negative procurement practices, government handling of risk transfer, the lack of a championed infrastructure finance delivery model and fragmented governance structures.

https://www.burges-salmon.com/perspectives-on-infrastructure-investment-opportunities-in-the-uk/perspectives-on-infrastructure-cbi/