It’s no secret that Britain’s infrastructure is in dire need of renewal.
From crumbling school buildings and leaking water pipes to outdated energy grids, ageing hospitals and congested rail networks, the signs of long-term underinvestment are everywhere.
The Labour government faces a near-impossible challenge: meet rising public expectations, address historic underinvestment and meet our climate targets, all while operating within a stubbornly tight fiscal envelope.
In this context, it’s time to ask a serious question: is it time to embrace a new generation of public-private partnerships (PPPs)
For over two decades, PPPs – particularly in the form of the once popular and now toxic Private Finance Initiative (PFI) – were a central plank of infrastructure delivery in the UK. But after years of political controversy and some high-profile failures, the model is now a byword for the failure of public sector procurement, with the then-Chancellor, Philip Hammond, declaring that PFI was “dead and buried” back in 2018.
Yet, just seven years later, the need for creative financing and delivery models is greater than ever. And the Treasury is looking again at PPPs as a means to inject much-needed capital into Britain’s creaking infrastructure.
A New Model for a New Era
The previous wave of PPPs, particularly the aforementioned PFI deals, suffered from legitimate flaws leading to absurd charges and, in some cases, profiteering (the £300 to change a single lightbulb for an NHS Trust jumps to mind), but poor implementation does not mean the whole model is bust.
You only need to look around the world to see that PPP can work and can deliver for both the private and public sector partners, as long as governments have structured deals transparently, aligned incentives properly, and maintained strong public oversight.
From hospitals and railways in Canada, to metro extensions in Australia or flood resilience programmes in the Netherlands, there are plenty of examples that we can look to for inspiration.
We can, and we must, learn from past mistakes to design a better model for today. One that establishes genuine partnerships that deliver long-term (and reasonable) returns for investors while providing the state with the capital it needs to invest.
Many of the problems in the last wave of PPP stemmed from inflexible contracts and an unfair sharing of risk, so if we are to embrace a new wave of PPPs, they must be based around some core principles of:
- Transparency, with clear benchmarks and public reporting.
- Balanced risk-sharing, ensuring private partners have skin in the game.
- Flexibility, to adapt to changing needs over time.
- Social value, including environmental outcomes and local economic benefits.
We need investment now: the case for urgency
Perhaps the most compelling reason for reconsidering PPP is the sheer need for investment across our public realm.
From the need for grid upgrades in the energy sector, to improving transport and connectivity across the country, building housing, renewing the NHS or modernising our schools, the list is endless and growing.
I have written before about the chronic underinvestment in capital that we have seen in the UK for decades, which means that there are no quick fixes – we need a colossal, systemic and sustained injection of capital across almost every sector.
The sheer scale of what is required would be out of reach of any government, not least one that has tied its hands by promising not to raise any of the main revenue–generating taxes.
Quite simply, we need private sector money, there is no other option
There’s Huge Appetite from Investors
And, as luck would have it, the private sector is keen.
Institutional investors, particularly pension funds and sovereign wealth funds, are actively looking for long-term, stable infrastructure assets that deliver consistent returns and, after several turbulent years lacking political and economic stability, the UK is now a highly attractive market: legally stable, politically predictable, and with a boatload of projects that would meet investment criteria.
Alongside the global demand, the government is putting British pension funds under pressure to invest more domestically, which could open up yet more capital.
What’s been missing up to now is a credible pipeline of investable projects – not credible in terms of having a viable case or potential returns for investors, but credible in being backed by clear policy and a willing government partner that will stay the course for the long term. If there is policy uncertainty, then investors will price in risk, leading to increased costs for the public sector To build that credibility, we need to think beyond this parliament, or even a single political party, but establish a new cross-party national commitment to infrastructure delivery.
With Labour under pressure to deliver tangible change and drive growth, the moment is ripe for a renewed approach. For the first time in years, all of these elements are aligning. Throw in a new cadre of local leaders, from mayors to combined authorities, and we might just have everything we need to move forward.
PPP 2.0
Reintroducing public-private partnerships is not about reviving the ideology of the 1990s. It’s about responding pragmatically to the scale of the UK’s infrastructure challenge in 2025.
A modern PPP framework would treat the private sector not as a substitute for the state, but as a partner to it, helping to deliver the infrastructure that drives growth, supporting public services, and preparing Britain for the decades ahead.
If we’re serious about growth and national renewal, it’s time to move past the political baggage and recognise PPP as part of the solution.
If we do, then who knows, we might even build some things along the way.
