Peter McBeath MBA FIBC FCMI FIOD

Government investigating private finance options for £9bn Lower Thames Crossing The government is considering using a private finance scheme to fund the £9bn Lower Thames Crossing, it has been reported. According to the Financial Times, chancellor Rachel Reeves is mulling a plan that would see investors receive returns from the new road if they bankroll its construction, potentially on indefinite or 125-year contracts. Sources told the newspaper that the model would be a new form of private finance initiative (PFI) – to deliver infrastructure while keeping debt off Whitehall’s balance sheet. However, the PFI approach was abolished by the UK government in October 2018 due to value-for-money considerations and the difficulties caused by the collapse of PFI construction company Carillion. The private model for Lower Thames Crossing could be similar to the regulated asset base (RAB) model used on the Thames Tideway project. The RAB model was also introduced as an option for financing nuclear power builds under the Nuclear Energy (Financing) Act 2022. Ofwat has also now made this type of funding - also known as direct procurement for customers (DPC) - compulsory for all water infrastructure projects over £100M. It sees private investors who fund and build schemes paid back through higher charges on utility bills. In the case of a road project, this could be through a higher toll charge. This is how the Silvertown Tunnel in London is being funded and delivered. Tolling for use the proposed 4.2km tunnel under the Thames between Kent and Essex had not previously been discussed publicly. WSP strategic growth lead Derek Sharkey told NCE: “Old-style PFI may have died in 2018, but partnerships between the public and private sector have and will continue to be a prominent feature of UK infrastructure projects.” On whether the partnerships are good value for the taxpayer, he highlighted current examples such as in the water sector and the new Mutual Investment Model in Wales. The latter is similar to PFI and is being used on a handful of projects including dualling sections 5 and 6 of the A465. He added: “What is evident, is that in a world in which investors, contractors and operators are being increasingly held to account during the operational phase, the public sector has mechanisms in place to reduce their payments burden where parties are underperforming. “This is not forgetting the risk transfer to the private sector, particularly on megaprojects of this scale and the excellent condition in which these projects are handed back to the public sector following expiry.” Alison Fagan, a partner at law firm DLA Piper said the prospect of private funding for the Lower Thames Crossing looked like “a very sensible solution to explore”. https://lnkd.in/efka62pg

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Into the final day of working with a group of construction industry professionals attending the #LeadersInConstruction programme Been a privilege to partner with Institute of Government & Public Policy and Mike Hurst over three years in creating and sustaining the programme We create a space to enable leaders to explore themes of leadership, culture, strategy, teams and change as applied to the construction industry in turbulent times On this final day we make it personal. What does 'leadership' mean for you in your direction of travel in work and life, and how do you balance the two? We often find that this is the element of the programme that participants find most valuable. The hustle and bustle of the everyday crowds out the space to be reflective, and we encourage people to be deliberately indulgent in using the space for that purpose. I'd say it's more important than ever in today's world that we put the human dimension of leadership centre stage as part of who we are as well as the roles we play. Connect with me if you're interested in exploring any of the above in 1:1 coaching or in designing a learning programme for a group of leaders.

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In recent days I have written and shared the EiB Business Development Growth Plan. It is clear that across many of our focussed sectors there is significant growth. The question posed below is valid. Not only a potential shortage of labour but the necessary skills to deliver the needs of Britain’s future. Both Government and the private sector will need to work collaboratively together to deliver the outcomes. #graduates #apprenticeships #veterans

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