Size matters

摘要

Given the extravagant post-Brexit spending promises being made by Messrs Hunt and Johnson, I've recently started to get a little nervous about how much money will be left to invest in national infrastructure. The timing was good for the Treasury's recent consultation on the role of private finance in the delivery of infrastructure - providing the opportunity to highlight the range of options available and make sure the right tools are in place to finance future infrastructure needs. The main focus of the consultation is on the need to identify replacements for two important sources of investment: PFI, officially abandoned for future projects in the 2018 Budget; and the European Investment Bank (EIB). Both have been used extensively to attract private finance into the delivery of "greenfield projects", where there is a much higher level of risk associated with construction and operation than an existing asset such as an airport or a water company with a known income stream. Unsurprisingly, most finance prefers lower-risk brownfield assets.