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The new UK government should seek private funding to help build new transport projects that are needed to address a “deep and growing productivity gap” between different parts of the country, an independent policy review has recommended.
Frequent changes to government policy in the past have left the UK with “no long term plan” to fix its railways, the commission led by former Siemens UK boss Juergen Maier found.
The government has pledged to boost the UK’s lacklustre growth and fix ailing transport links, but its tight public finances mean ministers are considering new funding models.
The Financial Times reported this month that chancellor Rachel Reeves is already considering seeking private finance to pay for a £9bn highway tunnel running under the Thames, in an effort to keep the costs off the government’s books.
The report — commissioned by Labour in opposition and featuring input from current and former bosses from Arup, Bombardier and Atkins — recommended a series of new public-private partnerships, along the lines of those more routinely used in Europe and Asia.
The British Infrastructure Council, a panel of major businesses set up by Reeves in opposition, should report by the end of the year on a “new approach to private finance”, it added.
“We propose that HM Treasury adopts a new openness towards partnering with the private sector on major transport projects,” it added, “supporting the country to fulfil its economic and productivity potential by unlocking significant financial investment.”
Labour has yet to outline exactly how it will approach the UK’s ailing transport infrastructure, which for years has been blighted by painstakingly slow delivery and cancelled projects, particularly in the north of England.
The resulting report found the economic opportunities presented by improved public transport have been “underestimated”, and that policy “chop and change” in recent years had undermined long-term planning.
With the UK’s public finances tight, the review recommended Treasury embraces “blended finance” partnerships, in which the private sector takes on delivery and recoups a return later.
“Though we do this in the UK to some extent, more nations, particularly across Europe and Asia, have embraced public-private partnerships to improve and expedite delivery of major infrastructure projects,” it said.
However, the report noted that certain conditions needed to be in place for such partnerships to work.
Global experience showed that they would need to serve routes with “demonstrable” strong demand, it said, while the projects themselves must be underpinned by the right planning permissions and straightforward design and engineering approaches.
In order to ensure this it recommended a series of special purpose vehicles for such projects.
Mega-projects intended to boost the north of England in particular have been blighted by cancellations, pauses and changes over the past decade.
The remains of HS2’s northern phases, which would have connected Birmingham with Manchester, were cancelled last autumn.
That decision left the government without a capacity solution for the highly constrained West Coast main line, which currently connects several major regional cities with London.
The new government’s view of Northern Powerhouse Rail, an east-west line connecting northern cities first mooted a decade ago, also remains unclear.
The report makes clear that such projects are vital to national and regional productivity.
Since being commissioned to lead the report, Maier has also been made chair of the government’s new energy body, GB Energy.
Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
