In her Budget speech, The Rt Hon Rachel Reeves said that "Private investment is the lifeblood of economic growth, but growth needs public investment too. My choice is not cuts, not stagnation but to maintain the additional £120 billion of investment I provided at the spending review."
The £120 billion of investment which the Chancellor mentioned is the additional departmental capital spending to which the government has committed over the course of the Parliament, but what about private investment in infrastructure and a new public-private partnerships (PPP) model for non-revenue generating assets?
Following the Spending Review, the government's 10-year Infrastructure Strategy clearly acknowledged that government funding (backed by at least £725 billion over the term of the Strategy) needs to be complemented by private investment. We wrote about the Infrastructure Strategy in June: click on the link in the carousel below to read our Insight in full. We noted that the Infrastructure Strategy postponed making a full and unconditional commitment to PPPs until later this year, stating that it required further exploration, initially within the context of the health sector. So, have we now moved forward? We need to consider the Policy paper 'Budget 2025'.
In the Budget policy paper, the government states that increasing both public and private investment lies at the heart of the government’s growth strategy. The government confirms its plans to use private finance to drive forward its infrastructure ambitions. Building on the Infrastructure Strategy, the Budget confirmed that the government's new NHS Neighbourhood Rebuild Programme will deliver new Neighbourhood Health Centres (NHCs) through the upgrading and repurposing of existing buildings and building new facilities through "a combination of public sector investment and a new model of PPPs". This comes as no great surprise as the development of a business case for using PPPs for NHCs was mentioned in the government's 10-Year Health Plan for England 'Fit for the Future'.
The government's approach will allow it compare different models of infrastructure delivery. It has confirmed that the new PPP model is being developed by the National Infrastructure and Service Transformation Authority and is being supported by the Department of Health and Social Care, building on the lessons learnt from past as well as current models. In addition, in order to ensure that the NHC PPPs are managed transparently, the projects will be budgeted for as if they are on balance sheet.
The Budget policy paper also confirms the government's commitment to continue considering the ways in which private finance can support the delivery of wider infrastructure plans, including leveraging private finance to help deliver the next generation of new towns, and in connection with projects that decarbonise the public sector estate.
In conclusion, we are taking baby steps. Nonetheless, they are certainly steps towards the development of a PPP model initially within the health sector, and potentially wider deployment, but we still await any visibility as to what that model might look like.
If you are interested in any of the topics covered in this briefing, please do not hesitate to contact the author.
