Private finance insights for UK infrastructure projects

Government urged to apply lessons in infrastructure investment

A new report from the National Audit Office (NAO), titled Lessons for Public Infrastructure Investment Using Private Finance, provides valuable insights for public bodies considering private finance for infrastructure projects. The report highlights important lessons for government to ensure private finance is used effectively while protecting taxpayer interests.

The NAO's findings focus on three main areas: creating the right conditions for investor and public confidence, making sound decisions at the policy and project level, and adopting a commercial strategy for successful outcomes.

The report stresses the need for a consistent and clear National Infrastructure and Construction Pipeline, which can help support investor confidence. Public bodies must also develop robust business cases for projects, weighing up the benefits and risks of private finance, and ensuring that risks are allocated appropriately. This means not transferring too much risk to the private sector, which could lead to higher long-term costs for taxpayers.

Gareth Davies, head of the NAO, said, "Private finance can contribute to growth through investment, provided that important lessons are applied from previous projects both in the UK and internationally."

The report also calls on government to adopt a commercial strategy, including effective procurement, contract management, and contingency planning, to manage supplier risks. This approach should cover the entire lifecycle of infrastructure projects, including asset decommissioning and contract extensions.

Sir Geoffrey Clifton-Brown, chair of the Committee of Public Accounts, added, "Government must be clear with taxpayers about the rationale for private financing, properly evaluating the benefits and risks compared to publicly funded projects."

The full Lessons for Public Infrastructure Investment Using Private Finance report offers detailed recommendations on how government can improve its use of private finance for infrastructure and better assess the impact on future projects.