How can Govt best use private finance to fund infrastructure projects?
The Public Accounts Committee (PAC) will hold an evidence session as part of its inquiry into government’s use of private finance for infrastructure at 3.30pm on Monday 12 May.
Meeting details
New infrastructure has been identified as central to economic growth by the government, which has indicated that it plans to work in partnership with the private sector to deliver this investment. Around £1 trillion of potential capital investment was identified in February 2024 by the Infrastructure and Projects Authority over the coming decades. A wide range of private financing models exist, including the widely-used Private Finance Initiative (PFI).
The National Audit Office recently reported with lessons for decision-makers on how to create the right conditions to support investor and public confidence in the use of private finance for infrastructure investment, in the context of government’s forthcoming 10 Year Infrastructure Strategy. The PAC will question two panels informed by the NAO’s report; the first with experts in infrastructure finance and public-private sector partnerships, and the second with relevant senior government officials.
The report also found that public sector bodies are due to pay £136bn in charges up until 2052-53 for all 665 ongoing PFI contracts. Half of these contracts are set to expire within the next decade, marking a period of transition of a significant number of assets to the public sector. The PAC is likely to explore how prepared public bodies are for the expiry of their PFI contracts, with other potential topics for discussion including recruitment and retention of people with specialist skills (a challenge for the infrastructure sector in general), and when private finance is appropriate to fund infrastructure.