Writing in Construction News, Paul Morrell, the government’s former construction adviser, offers a blunt assessment: “Policy and government communications are profoundly influenced by how they will play in the press and on the street.”
His critique of the government’s response to the Grenfell Tower Inquiry and the Construction Products Reform Green Paper makes essential reading.
Nowhere, perhaps, is Morrell’s point about perception shaping policy more relevant than in the debate over how to attract private finance to fund public infrastructure delivery. We recently learned that ministers will, next month, unveil their approach to this crucial area in the long-awaited 10-year infrastructure strategy.
The last major attempt, the private finance initiative (PFI) remains politically toxic.
Rolled out with gusto by New Labour in the 1990s, it quickly gained a reputation for enriching private consortia at the taxpayers’ expense.
Official audits showed that early PFI schools were inferior to those built via traditional procurement, but many in the construction industry argue that PFI steadily improved as public authorities became savvier in shaping the contracts.
Within two decades, the model progressed from cheap, cookie-cutter designs to delivering the Stirling Prize-winning Burntwood School in 2015.
Critics also often cited higher overall costs under PFI than traditional procurement routes but, in 2018, the National Audit Office concluded that there was insufficient data to prove or disprove that.
till, as Morrell highlights, such nuance is not the overriding factor influencing policymaking. PFI is politically unpalatable. However, its core mechanics are likely to return under a different name.
If the government wants to keep infrastructure spending off the books, any new public-private partnership model will need to replicate PFI’s transfer of ownership and maintenance risk to the private sector.
One obvious candidate is already in play: the Mutual Investment Model (MIM), developed by ministers’ Labour Party comrades in the Welsh Government. Conveniently, the civil servant who oversaw its rollout in Welsh schools, Sara Humber, now holds a senior post in the fledgling National Infrastructure and Service Transformation Authority.
MIM gives the government a minority equity stake in projects, providing a seat on a project vehicle’s board and a share of the profits, without ceding the level of control that put it on the Treasury’s books.
Whether such tweaks to the PFI model succeed in blunting inevitable political criticism of any new model unveiled for English infrastructure will be key in shaping the construction industry’s fortunes in the years ahead.
