Industry urges greater public engagement

Exclusive: UK govt must consider appropriate risk transfer as part of review; political buy-in crucial; local approach could benefit the model

UK government bodies need to increase their engagement with the private sector when reassessing the infrastructure finance market, industry experts have suggested.

A roundtable hosted by Partnerships Bulletin this week saw industry professionals gather to discuss the future of the market as we head into 2019 and the government plans to review the infrastructure finance sector following its abolition of PF2.

All agreed that there needs to be more engagement from the public sector in how any new models might be developed, while it was also acknowledged that political support will be a prerequisite to the success or failure of any new structures.

“We have to address the fundamental trust issue,” added one participant, pointing to the need to win over politicians’ support for using the private sector in major projects in the future.

Others suggested that the transparency of PFI has been its downfall in the past, with other models, such as the regulated asset base, more effective at presenting a positive picture to the world.

“Part of the solution may be to keep things more local,” suggested one, highlighting that positive solutions can be developed alongside local authorities and local people. A more bespoke approach to projects could then avoid the issue of all projects being tarred with the same brush, as has happened under PFI and PF2.

Some pointed to the continued issues around Crossrail as an example of the fact that all complex projects invariably face problems and delays, whether privately financed or not.

One of the most important areas on which the participants suggested the government needs to engage is around the level of risk transferred to the private sector.

“If the government transfers all the risk to the private sector and then turns its back on the project, there will be problems,” said one. “If the government genuinely thinks about entering into a proper partnership, there is potentially a better outcome.”

Meanwhile, some in the room urged their private sector colleagues to continue to push the positive messages that exist around private finance, so that politicians and others will begin to engage positively with the PPP concept again.