Institute for Public Policy Research, PROGRESSIVE REVIEW, Spring 2020, Dexter Whitfield
There are currently mixed messages in infrastructure finance. The Conservative government’s 2018 budget announced that no more private finance initiative (PFI) and PF21 projects would be approved: “Government will not be seeking a like-for-like replacement for these models. The government is open to exploring new ways to use private finance in government projects, but the benefits brought by private finance must outweigh the additional cost to the taxpayer of using private capital, and the government will not consider proposals demonstrating the same characteristics as PFI or PF2. However, with infrastructure spend and investment a stated government objective, their plans to finance projects remain unclear and contradictory. The article explains how PPPs are thriving despite claims to the contrary and the growth of global PPPs via private equity funds and the World Bank provide a stark warning for the UK.
It recommends four key points for a an alternative funding model; an integrated design and construction model; more intensive monitoring and performance review could lead to more terminations of contracts; and closure of the route to offshore tax havens and the secondary market for infrastructure funds.