Government's use of private finance for infrastructure: evidence to Public Accounts Committee inquiry

The government’s 10-year infrastructure strategy has the potential to bring fundamental change and opportunity to the NHS capital regime, in which historically the UK has underinvested compared to other OECD countries. 

To plug this gap, NHS leaders estimate that the NHS needs at least an additional £3.3 billion per year in capital investment over the five-year capital window at Spending Review. This is essential to efforts to boost NHS productivity growth to 2 per cent per year – a key requirement of the NHS Long-Term Workforce plan.

Allowing Integrated Care Systems (ICSs) and provider trusts access to private investment will help meet this challenge.

Government can do this by changing national policy and guidance to allow new routes for private investment (such as Mutual Investment Models), and by supporting an attractive investment market through policy stability and a steady pipeline of projects. 

As well as increasing the overall quantum of capital available, private investment models used in appropriate circumstances can streamline the investment process by transferring risk, at a cost, to the private sector. In turn, faster project initiation will help bring projects into service early and to avoid higher construction costs due to inflation. While the National Audit Office has found legitimate concerns with how PFI was negotiated and managed, we believe this valuable analysis offers lessons for future private models and does not preclude their use in the future. 

While an exact comparison is difficult, we argue that the New Hospital Programme shows its own version of poor value for money. The ongoing delays, and concerns about value for money from HM Treasury, mean that the projects have continued to rise in cost.