Wates Group has urged ministers to renew interest in private finance initiatives in order to successfully deliver the next wave of critical public infrastructure, including schools, prisons, hospitals, housing, and defence.
Launched via its white paper, A new public-private partnership model for the public sector, the contractor called for the government to rethink its position on private finance to deliver real growth for the UK economy.
Unveiled by Wates as the Alliance Investment Model (AIM), the new approach aims to improve on the ‘heavily weighted’ private sector Private Finance Initiative (PFI) model ‘divest of government responsibility’, towards an 80/20 equity split between the private sector and government co-ownership model.
Offering shared responsibility between the government and alliance partners through a special-purpose financial vehicle, it would also provide more transparency.
Eoghan O’Lionaird, CEO at Wates Group, said to combat the “acutely challenging fiscal picture” the government faced, it must access private capital.
“Our Alliance Investment Model outlined in our white paper is a fresh approach to funding the next generation of UK infrastructure, improving on PFI, and is the only viable route to unlocking the housing, schools and hospitals the country urgently needs,” he said.
“If we back the right assets and pick the right partners for projects over the next decade and beyond, using standardisation to drive efficiency, alongside shared responsibility and effective oversight, we can deliver a new chapter of quality infrastructure investment.”
The model focuses on five key aspects:
- Meet a £100 million asset or groups of assets threshold.
- Open to contractors with a proven track record and a strong balance sheet.
- An alliance procurement approach to ensure standardised designs.
- Share responsibility between the government and alliance partners through a special-purpose financial vehicle.
- A new public-private partnership government delivery oversight body under the National Infrastructure and Service Transformation Authority.
The approach is said to draw on successful models in Scotland and Wales.
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