Blog: Recent events show the UK is crying out for infra partnerships

Two major political announcements in recent days have again pointed to why the UK should be looking to develop stronger partnerships to deliver its infrastructure

The big political news in the UK infrastructure sphere this week has undoubtedly been the long-expected decision of the Labour Party to scrap its pledge to invest £28bn per year into the green economy.

Instead, if Labour wins the next election, it will commit to pumping around £4.7bn extra per year into green industries.

When asking where the apparently lost £23bn could be found, there appears to be an obvious answer that no-one quite wants to articulate: the private sector.

Yes, there is already a significant amount of money being pumped into the UK’s green economy from the private sector, with little or no involvement from the government. But that could be turbo-charged, not by the government throwing more and more money at the issue, but by working in partnership with private sector organisations to develop and scale up their ambitions.

It is, in part at least, what the UK Infrastructure Bank was established to do. Directing more money (debt and equity) to projects via the bank may be a valuable way for the government to de-risk certain green opportunities and establish markets that could not have existed without that push from the public sector.

Clearly any attempt to establish a public-private programme of investment could be difficult for Labour ahead of an election - faced, as it no doubt would be, with accusations of bringing back “discredited” (in the words of former Chancellor Philip Hammond) PFI. Nonetheless, Labour leader Sir Keir Starmer has spoken repeatedly of his desire to establish a relationship with the private sector, and to create a style of government that works in partnership with business and private enterprise.

In that context, the energy sector could provide the perfect opportunity. Cutting public investment in the energy transition should not be the end of the conversation - rather, it should be the beginning of a new conversation with industry over how the government can work most effectively to get the most bang for its buck.

Which brings me to the second item of the week: RAAC schools. The issue of reinforced autoclaved aerated concrete (RAAC) hit the headlines last year, when it became clear that a host of public buildings - many of them schools - were at risk of partial or even complete collapse, due to the RAAC having long outlived its lifespan and now having the potential to simply crumble.

Brushing over the fact that many of the schools caught up in this crisis would have been rebuilt had the Building Schools for the Future (BSF) programme not been cancelled in 2010, the question in recent months has been: what can be done to remedy this problem?

The answer came this week, when the government announced that all 234 affected schools would receive funding to remove and replace the RAAC - in some cases resulting in major rebuilding of schools.

This led to a new question: where will the money come from? That answer has so far been relatively vague, but there is a belief among unions that the announcement will in fact mean money previously earmarked for new buildings will be diverted to this latest crisis. Given that many schools awaiting funding are already in a dire state of repair, this will feel to many like rearranging deckchairs on the Titanic, with money being yanked from one crisis (a leaky roof, or draughty windows, for example) to be deployed in another (the current headline story of RAAC).

Again, the potential for private finance to help solve some of these problems is staring ministers in the face.

Take an equivalent situation from across the Pond. There. Prince George’s County in Maryland faced a conundrum of only having enough in-year capital budget to rebuild one school at a time - despite the fact that several were in urgent need of replacement or repair. The solution was a public-private partnership, allowing the authority to rebuild several at the same time, by relying on long-term repayments rather than up-front capital spending.

With UK schools in a similar place, could this model not be attempted here? Those with long enough memories will know that was part of the justification for PFI, but a more modern version involving true partnership between the public and private sectors - with both sides having stakes in the project and sharing the risks and rewards in a more appropriate fashion - could provide the solution.

No doubt anyone working in the UK PPP industry for more than 10 years will feel a little depressed at the notion that the country might be having to look to the US for inspiration, given that a decade ago it was very much the other way around. But as Labour and the incumbent Conservative Party cast around for ways to tackle mounting demands, from energy to schools and beyond, surely the opportunity held out by true partnerships with the private sector is too good to ignore?