An independent review has explored potential changes in transport funding, suggesting an innovative public-private partnership model.
- The report, led by Jurgen Maier and commissioned by the Labour Party, recommends the creation of high-level proposals by year-end.
- A call has been made to the British Infrastructure Council to establish new private investment methods for transport projects.
- The report highlights successful international models and the need for a structured framework to enhance private investor confidence.
- Strategies such as land value capture and a comprehensive playbook are suggested to ensure project viability and investor certainty.
A comprehensive review commissioned by the Labour Party has proposed a transformative approach toward funding transport infrastructure, highlighting the prospects of a more integrated public-private partnership (PPP) model. Led by Jurgen Maier, ex-CEO of Siemens, the Urban Transport Group (UTG) stresses the need for advanced proposals to be in place by the end of the year, which aim to attract private sector investment into substantial road and rail projects.
The report advises the British Infrastructure Council (BIC) to convene key stakeholders from the public and private sectors to design a novel approach to private finance. The approach would analyze the impacts on public sector debt while aiming to submit findings to the transport secretary and the chancellor by the end of 2024. Formed when Labour was in opposition, the BIC integrates influential figures from leading financial institutions like Lloyds, HSBC, and BlackRock, although the council doesn’t hold an official role in the government yet.
Emphasizing successful models from Europe and Asia, the report indicates that the potential expansion of PPPs involves merging public funding sources such as grants and land with private investments, including debt and equity financing. Projects would require specific conditions like high travel demand and simple engineering design, structured via Special Purpose Vehicles (SPVs) to balance risk and deliver projects effectively.
A key theme in the report is the capture of indirect economic benefits from transport initiatives, such as increased property values. It stresses replicating successful cases like the Northern Line extension and London’s Crossrail, where uplifted business rates helped repay initial investments. The report suggests that these models of land value capture warrant further exploration to standardise them for broader application.
Proposing an ‘Infrastructure Investment Playbook,’ the report calls for a codified framework detailing the approaches and models that the government intends to employ. This document would delineate the roles of public and private sectors, guide public entities in assessing project viability, and align with a transparent pipeline of projects. This is deemed essential for fostering investor confidence and ensuring project sustainability.
The UTG also underscores the necessity of long-term certainty and stability in funding strategies, protecting transport projects from fleeting political trends. A decade-spanning infrastructure plan overseen by the upcoming National Infrastructure and Service Transformation Authority is recommended to ensure continuity.
Finally, to enhance local execution capabilities, the review advocates for increased support to local authorities, empowering them with financial stability, avenues for revenue generation, and skill enhancement in project management and financing. This also involves establishing formal channels for sharing best practices, thereby amplifying private sector proficiency drawn on by local agencies.
The report lays a visionary groundwork for a transformative funding model in transport, highlighting the potential for impactful public-private collaborations.
