With Brexit & COVID 19 is there an argument for the return of Privately funded social Infrastructure projects in the UK ?

Question

Tom Spilsted · Accepted Answer

Whilst the logic of private investment into public infrastructure appears to be a simple solution to the dilemma of central government debt post Covid in particular and the need for continuing investment in new infrastructure in particular hospitals in the post covid world, the political reality is somewhat different.
The PFI's which were constructed and delivered have not on the whole had a good reputation in the public view due to
1. A lack of understanding as to what is included in the concession such as 25 years of maintenance and life cycle replacement.
2. The churn of ownership of the concession and perceived profiteering at the public purse expense.
3. Poor construction standards and workmanship on projects such as schools.
4. Concession repayments perceived as excessive when health budgets are under pressure.
Whilst much of the above is perception and press headline seeking, it makes it very difficult to proceed with a new wave especially when interest rates are so low that governments can borrow themselves very cheaply and not pay a premium to the investors.
Other matters also don't in my view point to further PFI or PPP approaches such as
1. Risk transfer from the investment vehicle to the contractor cannot be 100% some should stay with the investor as it does in any development.
2. Risk and opportunity should stay with the party best able to manage it.
3. Main contractor balance sheets have taken a lot of pressure in recent years and many are still rebuilding them.
A new approach is required because the investment is clearly needed worldwide and investors need somewhere to safely earn growth.

With Brexit & COVID 19 is there an argument for the return of Privately funded social Infrastructure projects in the UK ?

Infrastructure

UK

ANDREW THOMAS

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