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Government told to do more to attract private sector funding for transport

Transport experts have told the government that it must do more to lure private sector investment into transport through pump-priming or commercially underwriting viable schemes.

The Chartered Institution of Highways & Transportation (CIHT) has joined forces with Parsons Brinckerhoff and Balfour Beatty to compile a report that sets out new and innovative models for funding transport infrastructure.

The report, Infrastructure Funding & Delivery: An Action Plan for Change, has been sent to transport secretary Justine Greening and other ministers at the Department for Transport. It calls on government to view itself not as a provider of infrastructure but as an enabler of infrastructure.

Crucially, the CIHT proposes that the public sector should help provide forward funding or commercial underwriting to progress infrastructure schemes that have already been identified and are financially viable.

It says that where there are sufficient private sector contributions to ultimately pay back funding, but private sector cash flow constraints prevent the scheme progressing, the government could provide low risk forward funding to stimulate the economy by the development of essential infrastructure.

CIHT also proposes that decision making for user charging on local roads, such as small scale congestion charging schemes, should be devolved to local authorities.

“The funding and delivery of UK infrastructure needs to change to ensure that the infrastructure necessary for the UK to compete globally is in place, planned and improved over the short, medium and longer term,” said CIHT chief executive Sue Percy.

“Finding solutions and developing new models for infrastructure investment means clients, governments and the private sector must come together and agree a way forward. Unfortunately the UK’s status as a developed economy has perhaps made us complacent that increasing improvements in our existing infrastructure would always continue with minimal investment,” added Parsons Brinckerhoff managing director for Europe Nick Flew.

“The tough choices now needed to renew and increase the capacity of our infrastructure to support economic growth cannot be put off forever. How we meet this challenge will, in part, influence the security, prosperity and well-being of the UK for future generations.”

Key messages

The three key messages running through the recommendations and the report as a whole are:

  1. Encourage greater private sector investment by providing gap and forward funding to enable projects to be delivered.
  2. Better define roles and responsibilities of those involved in the planning and delivery of infrastructure, especially Local Enterprise Partnerships (LEPs) and local authorities to allow quicker and more effective decision making.
  3. Create local infrastructure investment funds for projects which should be paid back by capturing the value of the economic benefit as revenue streams.

More forward funding from both the public and the private sector should be a short term aim as forward funding has the advantage of stimulating financially
sustainable development and could give a return to investors and create a relatively simple private sector infrastructure investment market.

Case study

The CIHT cites Coleshill Parkway Interchange as an examplar of its proposed approach.

The scheme which is located in North Warwickshire close to the West Midlands conurbation opened in 2007 providing a multi-modal interchange, comprising a two-platform railway station, a five bay bus station, a 200 space car park and a road bridge over the railway.

The scheme was promoted and delivered through a partnership of Warwickshire County Council, North Warwickshire Borough Council and Laing Rail supported
by Network Rail and Central Trains. The cost of the scheme was £8.4M of which £2.7M was provided by Laing Rail and £1.5M from contributions from local developments. The remaining costs were publicly funded, including a successful bid for DfT funding of £3.8M.

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