Browne Jacobson and CBI join forces to champion revival of PFI-style models for infrastructure investment

Browne Jacobson and the Confederation of British Industry (CBI) are partnering to help shape the future of public-private partnerships (PPPs) in financing infrastructure renewal across the country.

The UK and Ireland law firm has signed a strategic partnership with Britain’s largest business organisation to develop research that can advise Whitehall policymakers on how to leverage private sector investment for building schools, hospitals, prisons and transport projects.

It will explore how the government can identify the most effective PPP models, following earlier waves of projects such as PFI and PF2, which supported more than 700 public infrastructure projects from the late 1990s until 2018.

The partnership comes as the government sets out bold ambitions to deliver 1.5 million new homes and 150 nationally significant infrastructure projects within this parliament, with plans to allocate £725bn over the next decade.

However, with constrained fiscal headroom and a challenging economic landscape, it is unlikely public funds alone will achieve its ambitions and crowding in private sector funding will be required.

Craig Elder, Partner in public procurement at Browne Jacobson who worked on some of the UK’s highest-value PFI projects, said: “The CBI has shared its policy expertise with various governments over the years on a range of strategically important economic projects, and this partnership offers an exciting opportunity for Browne Jacobson to join the debate on one of today’s biggest issues – the national renewal of infrastructure that enables our society and economy to thrive.

“Government alone lacks all the economic tools to provide sufficient levels of public investment, and policy solutions can help to deliver private finance and skills.

“Our firm’s wealth of experience in advising on PPPs, and our 50-50 split between private and public sector clients, means we are well-positioned to provide input on the legal apparatus required for a new PPP programme.

“This should learn the lessons from the perceived drawbacks of earlier schemes by implementing changes such as greater flexibility, transparency and better value risk transfer.

“Through our partnership with the CBI, we will be front and centre in developing recommendations with its policy experts, and will be able to test ideas with senior business leaders and key government stakeholders across its network.”

The government has committed to progressing major infrastructure projects such as East West Rail connecting Cambridge with Oxford and the Liverpool to Manchester arc, which may form phase one of the long-anticipated Northern Powerhouse Rail project.

But while its infrastructure blueprint, UK Infrastructure: A 10-Year Strategy, acknowledges the need for PPPs, it states they will only be considered for projects and sectors where there is a revenue stream, appropriate risk transfer and value for money for taxpayers.

The CBI believes there is an opportunity for the government to be less risk averse and explore a broader application of PPPs to deliver on its economic and social infrastructure ambitions.

Through this project, Browne Jacobson will work with CBI’s Infrastructure Working Group, which comprises more than 60 businesses that operate across the UK to bring deep industry knowledge of infrastructure financing and delivery. The organisations will collaborate in engaging key government departments, including the Treasury, National Infrastructure and Service Transformation Authority, Office for Investment and National Wealth Fund.

The project will be highlighted at the CBI Annual Conference on 24 November during a panel session on ‘The £billion opportunity: attracting global capital to power innovation and infrastructure’.

It will culminate in a joint report advising on credible frameworks that will give greater clarity and certainty on the delivery of future economic and social infrastructure. It will set out learnings from previous PPP and suggest which models the government could deploy if it is to partner effectively with the private sector.

Rain Newton-Smith, CEO, CBI said: “The private sector stands ready to support the government's infrastructure ambitions but really wants to see a less risk averse approach to partnering with business. By developing the next generation of public-private partnership models the government could crowd in private capital and accelerate the delivery of major infrastructure projects such as new schools, hospitals and roads. 

“Since the moratorium on new private finance in England in 2018, countries such as Canada, Australia and the United States have successfully  delivered hundreds of projects through reformed PPP models leaving the UK as an international outlier. 

“Public investment alone will not deliver the government’s infrastructure ambitions, which makes it imperative to explore how a mixed market of new PPP models could deliver the economic and social infrastructure we want to see.

“Our partnership with Browne Jacobson aims to bring forward such working models that the government can use to deliver on its Industrial Strategy and infrastructure ambitions.”