Election 24: Replace PFI to boost infrastructure investment, major contractors say

Major contractors including Balfour Beatty and Morgan Sindall are demanding a new financing model from the next government to drive private investment in infrastructure.

The contractors, also joined by the likes of Mace, Costain and Laing O’Rourke, warned that the next government can only meet its national targets around net zero and improving infrastructure if the private finance initiative (PFI) funding model is replaced.

These tier one firms are part of a 12-strong group of contractors and consultancies that launched a ‘Blueprint for Growth’ this morning.

Royal Bam, Galliford Try, Vinci Construction, AtkinsRéalis, Mott MacDonald, VolkerWessels UK and WSP also put their names to the manifesto, which outlined a dozen infrastructure priorities (see list below) ahead of the general election on 4 July.

Although around half of the UK’s infrastructure is funded and delivered by the private sector, the manifesto’s signatories said there is “potential for further growth with a new financing model”.

They added: “To meet national objectives like achieving net-zero emissions and improving infrastructure, new financing mechanisms are necessary to replace outdated schemes like the PFI.”

Contracts under PFI are agreements between private firms and a government department where the private firm designs, builds and finances public assets.

But the format has been criticised for causing disputes between different parties.

In their Blueprint for Growth, the 12 firms also called on the next government to guarantee investment in large infrastructure projects to prevent increased costs and uncertainty.

The judicial review system should be revamped, they added, arguing that many cases “lack merit” and are used by opponents to delay projects.

“More diligence must be applied to follow processes correctly, and resources should be allocated to resolve legitimate reviews promptly,” the signatories said.

Large projects like the Stonehenge Tunnel and the £228m A57 Link Roads have been delayed after long-running judicial reviews, in some cases leading to cost overruns.

The industry manifesto also reiterated the call to install an infrastructure minister at cabinet level, who would coordinate major infrastructure projects across government and tackle barriers to implementation.

Earlier this year, Costain chief executive Alex Vaughan said his “one wish for the next government” was for the government to appoint a minister for infrastructure.

In a blogpost this morning on social media, he also called on the next government to implement recommendations made by the National Infrastructure Commission (NIC) in its second assessment last October.

Vaughan warned that the UK is “stuck in a quagmire of short-termism” and the result is a “breeding ground for inefficiency and higher costs”.

He said the NIC’s recommendations, which include a significant increase in infrastructure spending, should be implemented in a 10- or 20-year plan.

The group further demanded efforts to avoid delaying investment into projects such as HS2 and the Lower Thames Crossing, in a bid to prevent increased costs and uncertainty throughout the infrastructure sector.

Balfour Beatty chief executive Leo Quinn, one of the manifesto’s signatories, said a “better tomorrow must be designed today”.

He added: “As leaders of this sector, the joint signatories believe this ‘manifesto’ will drive productivity and jobs, accelerating our industry to build the sustainable homegrown energy and transport links that will provide strength and security for Britain.

“Let’s get Britain building the next decade of infrastructure.”

The Blueprint for Change follows a list of 12 priorities drawn up by the Chartered Institute of Building (CIOB) last week.

In particular, the CIOB urged the next government to provide financial incentives to encourage companies to invest in modern methods of construction.

The 12 demands in the Blueprint for Growth

  • Depoliticise infrastructure.
  • Appoint a Cabinet Minister responsible for infrastructure.
  • Increase private investment in public infrastructure.
  • Timely, holistic decision-making on key areas.
  • Improve budget setting for infrastructure schemes.
  • Efficient risk allocation.
  • Investment continuity.
  • Simplify the judicial review process.
  • Mandate consideration of the national interest.
  • Self-certification system to accelerate delivery of infrastructure projects.
  • Transform the Apprenticeship Levy.
  • A flexible immigration system.

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