16 March 2023


  • Paul Jarvis, Editor, Partnerships Bulletin (Chair)
  • Stuart McMillan, Partner & Head of Infrastructure, Burges Salmon
  • Rob Croxen, Alvarez and Marsal
  • Manish Gupta, EY
  • Helena Anderson, Ikigai
  • Matthew Vickerstaff, Infrastructure and Projects Authority
  • Julia Prescot, Meridiam, and deputy chair of the National Infrastructure Commission
  • Michael Blake, Octopus Investments
  • David Rose, Rock Rail
  • Derek Sharkey, WSP
  • Patrick Hammill, Vercity
  • Colin Ligman, Partner, Burges Salmon
  • Chris Simms, Partner, Burges Salmon 

All sides of the industry came together for a Burges Salmon & Partnerships Bulletin roundtable discussion on the future of the UK’s infrastructure investment industry. From internal confidence to international competition, the UK government and the infrastructure industry finds itself at a precipice with the future at stake - but who is willing to take the jump?

The event began with some scene-setting, provided by Matthew Vickerstaff from the Infrastructure & Projects Authority (IPA) perspective, and Julia Prescot, who gave an overview into the work of the National Infrastructure Commission (NIC) as it gears up for the publication of its second National Infrastructure Assessment later this year, while also offering investor-led feedback through her role with Meridiam.

“It still is a very constrained environment,” said Vickerstaff. “There is a lot of analysis done from a project delivery perspective.

“Given we have the dynamic of constrained public finances and the desire to grow the economy, improve productivity and level up the country, [...] the desire to attract private sector investment into that is very much in focus.”

The IPA has not been short on coming up with creative tools over the past decade, from the Contracts for Difference regime to developing the regulated asset base (RAB) model for use in the nuclear sector on the Sizewell C project. However, the IPA is now wrestling with creating new pipelines and directions for investing in the assets of the UK’s Net Zero future, from hydrogen, heat networks to carbon capture, usage and storage. Each of these comes with their own difficulties, and keeping them at the top of the agenda is a battle amid an unstable surrounding, both domestically and internationally.

“It’s very important to keep the drumbeat of the importance of infrastructure and its general relationship to the growth of the economy together, because sometimes it can get lost in the malaise,” said Prescot.

There are positive signs from the market, in terms of willingness to go beyond their core focusses and onto more burgeoning sectors. “From the investors I speak with, their risk appetite has changed vastly,” said Manish Gupta, partner at EY. “The kind of things people invest in now, I would not have imagined five years back.”

Gupta cited the emergence of large fund-owned corporations that have become platforms for further investment: “None of the entities will be able to do giant-sized projects but incremental changes, if the strategy is right, do get you there.” He added that there is “a lot of positivity in the way the market is moving”.

Nonetheless, clarity and certainty remain issues with the market in the UK. With a huge array of potential options coming forward, questions of bandwidth, affordability and whether some sectors should be streamlined naturally arise.

“How do you make it easier for investors to understand what is going on?” Gupta added. “From an investor perspective, it can become a bit too much.”

This sentiment was echoed by many around the table, with a suggestion emerging that specific sectors should be put forward as frontrunners.

“Do we wait until the intellectual architecture is perfect and then go to investors or do we say that certain sectors are a priority and promote those?” said Prescot, speaking in her role as co-founder and chief strategy officer at Meridiam Infrastructure. “Focus and making sure to investors what the opportunities are is really important because the mood-music has changed.”

From a government perspective, managing the balance between not wanting to pick winners in terms of technologies, while at the same time providing the certainty that investors want in some sectors is tricky. No government wants to invest in the next ‘Betamax’, only to watch VHS take off. However, with a desperate need to move quickly to foment the energy transition, simply sitting on the fence to wait until the dominant technologies emerge may not be feasible.

As Vickerstaff put it: “How much do you let the market decide and how much do you facilitate the market?”

“As investors, we’re asking for prioritisation,” said Prescot. “If we can decide which are the most important sectors in the whole context, it’s going to be important to push those sectors to get to those inflection points.”

As an investor, Helena Anderson of Ikigai was clear on what’s needed: “Systems thinking is often lacking

“Investors are starting to think in energy systems and realise that value is created through regional commodity clusters. That is how we also deliver on levelling up. Fundamentally we need to look at delivering an integrated, optimised, decarbonised energy and transport system, in and for each specific geography,” she said, listing off the multiple sectors that need development at the same time. “If government is not mirroring that type of thinking in the way policy is developed and communicated, it will be out of sync with what business is now doing.”

That being said, there is bullishness on the UK’s future in the medium to long term, but it will need management to get through the period leading up to that:

“We’re very positive about the UK market,” said David Rose, who called for pipelines to be maintained while decision-making is done. “What would be bad would be to turn the taps off and various factories around the country to close and then for us to decide we need them again.

“Whilst understanding that there are cost pressures, trying to maintain a steady pipeline is key,” he added.

While many round the table spoke of continued progress in the UK, with some pointing to limited but interesting programmes such as the water industry’s direct procurement for consumers (DPC) model, a number in the room agreed that there remains a sense of holding back from investors, as they wait to see where the government chooses to go.

Part of this reluctance also stems from the past year’s turbulent economic times, from war in Ukraine to the brief and destabilising tenure of prime minister Liz Truss. On the plus side, there was a general feeling among participants that the current administration has made strides in repairing at least some of that damage, albeit starting from a low base.

From business cases to government support for things such as carbon capture storage, to changes to diesel levies that perversely support diesel bus use, there are numerous issues in the government’s hands that were being pointed at as ways to get quick wins.

However, the UK is facing external difficulties as well as internal ones. The boardroom discussion repeatedly mentioned the pull of rival, global pipelines as the backdrop - particularly the immense gravity of the USA’s Inflation Reduction Act and the promising PPP and megaproject pipelines in the Middle East, such as in Saudi Arabia and Kuwait.

WSP’s Derek Sharkey highlighted the continued shift of expertise in the UK as an example of this, resulting in a dearth of expertise. “Looking at the global market, there’s more certainty and short term opportunity elsewhere,” he said. “By creating a strong primary pipeline in the UK, will attract new talent and future leaders to the market.”

There isn’t likely to be the same kind of energy support packages or PPP mega-pipelines on the way in the UK. “We have got to remain internationally competitive,” said Prescot. “One of the ways we can do that is to make sure that we have a very clear approach on business models, particularly in the energy sector, that people can invest in.”

For more information on our Infrastructure practice, please contact our Head of Infrastructure Stuart McMillan and take a look at our webpage.


This content was originally published by Partnerships Bulletin.

Key contact

Stuart McMillan

Stuart McMillan Partner

  • Head of Infrastructure
  • Banking and Finance
  • Energy finance

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