Written submission from The Association of Infrastructure Investors in Public Private Partnerships (AIIP) (PRO0120)

The Association of Infrastructure Investors in Public Private Partnerships (AIIP)

Submission to “Priorities of the Business and Trade Committee for 2026”

Introduction

The Association of Infrastructure Investors in Public Private Partnerships (AIIP) is the trade body for UK PPP / PFI investors. With significant oversight of Britain’s PFI portfolio, our members represent over 70% by value of current PFI/PPP assets in the UK, around £50bn.

As the voice of Britain’s infrastructure investors, the AIIP can help with the investment to rebuild Britain. The Committee has identified the correct scope of questions – the factors that most affect confidence in the UK as a place to invest and expand, stability, predictability, and long-term planning are all necessary to fix. As is the problem of toxic relationships through adversarial contract management, particularly in the NHS sector, outlined in the White Fraiser[1] report, which we discuss below.

The NAO in its March 2025 report[2] identified a £1 trillion opportunity to invest in infrastructure. The Committee should explore how the private sector can step in where the government’s fiscal constraints leave gaps. It should also consider the long-term investment in maintenance and upkeep of assets and the problem of inconsistency over the lifecycle of budgeting for upkeep where those assets are held in the public sector compared to the stronger obligations on both parties created by PPP.

The current infrastructure planning and delivery model has often proven costly and misaligned with strategic needs. Fluctuations in investment cycles have led to increased project costs and diminished public confidence. Our research[3] highlights that peaks and troughs in investment not only escalate costs but also undermine the perceived value of infrastructure projects. With the establishment of NISTA, the AIIP strongly welcomes bringing together economic, social and housing infrastructure in one place within the 10-year plan and should bring coherence to the government framework.

We believe that private investment was underutilised by the previous government to the end that they had a moratorium on new PFI projects. Issues around adversarial contract management have affected confidence and mixed messages on the stability of investment decisions – most notably over HS2 – have added to a general sense that the UK government needs an approach to growth that understands an investment sector that is global in outlook and long term in commitment to returns.

As the Committee questions identify, planning delays and an unstable policy environment have historically hindered effective infrastructure delivery. Inconsistent policies and unclear strategic directions have deterred private investment and complicated project execution.

We want to emphasise the connections between a set of government objectives:

• The need for investment to repair and to build social infrastructure;
• strong need for economic growth, private sector capital and inward investment through improved confidence from investors;
• the need for capital works to achieve net-zero emissions, both in the public estate with an NHS target date of 2040, and supporting the UK’s wider target date of 2050; and
• Creating attractive and stable investments in the UK for pension funds.

Summary of our recommendations:

• The Government should expand its proposed Public Private Partnership (PPP) programmes in social infrastructure beyond Neighbourhood Health Centres and decarbonisation projects to rebuild Britain and drive growth.
• The NHS LIFT programme provides a ready-made solution to accelerate delivery of new health centres and attract more private investment. The Government wants to deliver “over 100” Neighbourhood Health Centres by 2030 - PPPs are a way to do that on time and on budget.
• Extending existing contracts is a fast and effective way, in a capital constrained environment, of making a demonstrable improvement to social infrastructure and growth in this parliament.
• The Government should consider ways to improve and simplify the PPP model, including developing jointly appointed independent certifiers throughout construction to ensure impartial oversight and quality, and making unitary charges more transparent to hold contractors accountable.
• Reducing adversarial contract management in the NHS would reassure the international investment community, reduce the burden on business and could increase investment in the UK, which is the lowest in the G7. 

A Low Investment Nation

The UK is a ‘low investment nation’. Since the early 1970s, the UK has spent less than half our OECD peers on physical capital investment. The closest we came to the OECD average was during the PFI period in the 2000s.

A similar picture can be found in terms of the G7 - we have lagged behind on both public and private investment as Treasury Minister Torsten Bell MP pointed out: 

There are many reasons for this from planning to confidence in the UK’s infrastructure pipeline, our focus is on how to attract more private investment into our social infrastructure: hospitals, schools, health centres, and other key infrastructure such as prisons.

Accelerating delivery of infrastructure through PPPs

Almost every other Western country in the world uses a version of Public Private Partnerships (PPPs) to build the hospitals and other public assets they need. Ironically, it was the UK which pioneered these but no longer benefits from them in social infrastructure.

The Government has recently announced plans to allow PPPs to be used in select cases - such as the new Neighbourhood Health Centre programme. This is very welcome, and we urge the Government to expand this to other public sector areas, including acute care.

A National Audit Office report released in March 2025, Lessons Learned - Private Finance for Infrastructure[4] stated clearly that Public Private Partnership (PPP) projects are “usually delivered on-time and on-budget”. A recent report from the NHS Confederation found that PFI projects “appear to offer better value for money than the recent New Hospitals Programme (NHP), once delays and overspend costs are accounted for.”

AIIP analysis of official Treasury returns[5] also shows that 90 hospitals were built under PFI in less than a decade, with the capital investment totalling over £10 billion (which would be around £19.2bn in today’s prices). By contrast, the New Hospital Programme, announced by the previous Government in 2019, has been beset by delays - many of those won’t even start building until 2039. In a fiscally constrained environment, PPPs allow you to deliver much quicker.

For health centres, there are some ready-made solutions which could be adapted to meet the Government’s ambitions. Programmes like NHS LIFT built 350 health centres in some of the most deprived communities[6], which benefitted the public and NHS staff and provided value for money. They also gave a financial stake in the buildings to the public sector, a genuine partnership bringing public and private together. An NAO report found that it could deliver value for money and was “an effective means of improving primary health and social care”[7].

PPP does more than deliver new bricks and mortar. It provides guaranteed maintenance, future proofing against the kind of capital starvation that has led to today’s £14 billion maintenance backlog in the NHS[8]. Overall, in the public sector there is a £49 billion maintenance backlog and associated life safety risk, according to the NAO[9].

Additional infrastructure investment through PPP also provides an opportunity for UK pension funds to invest in the UK and provides significant growth opportunities in the construction and built environment sectors. Building Magazine’s Funding the Future campaign is urging “the government to significantly expand its proposed public private partnership programmes beyond healthcare facilities and decarbonisation projects.”[10] They join other key stakeholders - business and health leaders such as the CBI[11] and the NHS Confederation[12] in urging private investment to rebuild Britain. 

New Models for PPPs 

In a report in September, the AIIP proposed a series of changes to the way PPPs are developed, to learn lessons from the past, avoid disputes, and ensure value for the taxpayer. Our New Models Report[13] outlines 35 recommendations across seven areas for an improved PPP model, including developing "jointly appointed independent certifiers throughout construction" to ensure impartial oversight and quality. Unitary charges could be broken down into different payments - covering construction, financing and facilities management to improve accountability if contractors don’t deliver. 

The renewal of PPP should reduce complexity where not warranted, and measure what matters - some current contracts have over 500 separate measures of performance, presenting an administrative burden on all parties, often for limited benefit.

Extending PPP contracts to attract rapid investment and growth, and deliver Net Zero

There are a significant number of PFI contracts coming up to end of term and handback under this Government - we estimate there may be as many as 139 contracts expiring with around £5bn of assets this Parliament.

Extending existing contracts is a fast and effective way, in a capital constrained environment, of making a demonstrable improvement to social infrastructure in this parliament. There could be quick injections of capital into Trusts to upgrade and add new capacity, give opportunity for, e.g. net-zero pathways, new equipment, new wards, deliver Resets consistent with NISTA guidance, and start to pilot some of the terms under which new PPP models could be designed.

5,400 clinical service incidents occur in the NHS every year due to property and infrastructure failures – a serious failure in service that has economic impacts.

This would fit in with the ambition expressed in the Budget that “privately financed projects and programmes – including PPPs – will also be considered for projects that decarbonise the public sector estate." This could be delivered rapidly with current relationships in place.

Reassuring Investors 

Most PFI contracts are managed successfully. An independent report commissioned by Government known as the ‘White Fraiser Report’, found that “the number of PFI projects engaged in disputes makes up less than 10% of the total number of operational PFI projects”[14]. In the health sector, however, some of these relationships have broken down which is in turn having an impact on the confidence of future investors, in a competitive international environment. While AIIP members are UK based, many of their end investors include UK and global pension funds and international investors. All are free to invest elsewhere.

White Fraiser identified several issues including: 

• Storing up issues to deluge the help desk with multiple faults in a burst, often timed to achieve maximum commercial impact and disruption rather than to have issues addressed;
• Prioritising the use of technical and very literal interpretation of specifications in the PFI Contract, seemingly to maximise commercial leverage, rather than seek to resolve underlying issues; and
• Shouting and aggressive conduct during meetings

Often these issues are driven by third party legal advisers and consultants, which can have a further impact on public resources. White Fraiser proposed a ‘Reset’ approach which we fully support[15]. Progress has been made, but further work is needed to build up confidence on all sides. 

Projects must be given the space to rectify, and held to account when they do not, but without the threat of insolvency as a tool of negotiation. This is a matter that the AIIP and officials are working together to achieve.

Reducing adversarial contract management in the NHS would reassure the international investment community, reduce the burden on business and could increase investment in the UK’s social infrastructure.  

Learning from International Best Practice

Other models have been employed internationally in the plethora of jurisdictions that use Public-Private Partnerships including the progressive P3 model in Canada and the precinct model in Australia.

In an international context, many other countries use PPP without any consideration for accounting treatment, emphasising different value drivers as reasons to use the model. New Zealand’s most recent PPP framework, for example, emphasise that PPP is viewed as ‘a project delivery model which utilises private capital for the incentives this provides rather than cash flow spreading benefits or to move project obligations off-balance sheet’[16].

After a seven-year hiatus, New Zealand is experiencing a resurgence in public private partnerships, with significant implications for infrastructure investors. The coalition government has launched a refreshed PPP framework and committed to a $207bn infrastructure pipeline spanning 9,000 projects, using simplified procurement rules. The Transmission Gully experience taught valuable lessons about project sizing, long-term risk transfer, and the importance of due diligence.[17]

As well as learning from our own experience of PPPs, we should apply the best models internationally to attract investment, rebuild our public sector and deliver growth.

AIIP

December 2025