Law firm partners with CBI to create new PPP framework

In a joint report, Pipeline to Progress: Making UK Infrastructure Investable they warned that without decisive action, Britain may continue to fall behind international competitors in mobilising private investment for projects including schools, hospitals, prisons and transport.

The report said a modern PPP programme should be built around:

• a standardised national legal architecture;
• proportionate risk allocation;
• auditable social value;
• flexible financial structures;
• strengthened governance and accountability
• a clear delivery pipeline through mayoral and combined authorities.

It also called for a fundamental shift in the relationship between central government and combined authorities, with metro mayors given autonomy over projects within multi-year settlements.

The report urged the creation of a central PPP delivery body, using Ireland's National Development Finance Agency as a blueprint.

By combining commercial capability, template governance and programme-level oversight, the agency “gives investors confidence, reduces bid costs and prevents contractual drift”, the report said.

This new delivery body would be responsible for enforcing transparency requirements.

The report said transparency was the main lesson from previous PPP models, like the private finance initiative (PFI), “where commercial confidentiality frequently obscured performance from public scrutiny”.

PFI supported more than 700 public infrastructure projects from the late 1990s until 2018, but attracted criticism for a perceived lack of flexibility and transparency and poor value risk transfer.

Browne Jacobson and the CBI said their report was “unambiguously in favour of transparency: all PPPs should be subject to mandatory disclosure of refinancing events, ownership changes and key performance information”.

Contract structures should be publishable as standard with only limited and justified redaction.

The report made more than 20 recommendations to the Cabinet Office, HM Treasury, the National Infrastructure and Service Transformation Authority, and contracting authorities.

Craig Elder, partner in public procurement at Browne Jacobson, said: “Although learning from the past and building on what worked in previous models, this report is resolutely forward-looking.

“It focuses on practical approaches that can be implemented now to set out a legal and contractual framework that enables public and private sector collaboration when tackling the UK's infrastructure deficit.

“The market is clear: there is appetite to support UK infrastructure where risk is balanced, pipelines are credible and contracting is agile. Clarity of intent is a vital signal that government can make to crowd in investment.”

CBI chef executive Rain Newton-Smith said the constraint on projects progressing was not finance but “priceable, patient capital aligned to delivery risk and pipeline certainty.

“The binding issue is whether the UK offers credible, investable propositions supported by consistent pipelines, clear risk allocation and professional stewardship over the life of assets.”

Mark Smulian