Source · Select Committees · Public Accounts Committee
Recommendation 11
11
Not Addressed
Government does not routinely evaluate completed infrastructure projects to assess their success
Recommendation
Though government attempts to determine the success of a project through measures such as cost-benefit analysis, they do not routinely evaluate completed projects.19 The UK has used a variety of private financing models to deliver new infrastructure, including but not limited to: Contracts for Difference, which guarantee wholesale prices for generators over 15-year periods (e.g. offshore wind); Regulated Asset Base models, which allow a private sector provider to charge users a regulated price for utilities and include an element in bills to fund new investment; and the Private Finance Initiative (PFI)20 used extensively between 1992 and 2018 to design, build, finance, and operate infrastructure projects for public authorities, such as schools and hospitals.21
Government Response Summary
The government's response describes its existing pre-project appraisal process using the Green Book to identify the preferred financing model, but does not commit to or address the recommendation for routinely evaluating completed projects post-implementation.
Government Response
Not Addressed
HM Government
Not Addressed
2.1 The government agrees with the Committee’s recommendation. Recommendation implemented 2.2 The government’s 10 Year Infrastructure Strategy sets out several of the main basic models available to deploy private finance into projects, many of which have been and continue to be highly successful in delivering infrastructure investment. 2.3 In general, while some model archetypes might be suitable for different markets or different asset types, the selection of a financing model will be highly dependent on the specifics of a given project (e.g. the risk profile, maturity of technology, and so on). The Treasury's preferred model for any type of infrastructure project is the one that offers the best value for money, and it appraises proposals on a case-by-case basis using the Green Book. 2.4 Contracting authorities should design their model with suitable provisions and appropriate risk transfer based on the specific project at hand ensuring value for money. This means that the appropriate model will often be a bespoke version of an existing basic model. NISTA provides advice and guidance to contracting authorities, and the Treasury teams and NISTA work together to implement the 10 Year Infrastructure Strategy including through considering how private finance can deliver the government’s infrastructure priorities. 2.5 The Treasury evaluates the costs and benefits of alternative options – including financing models – as part of the Business Case process to identify the preferred model for each project and to ensure value for money is achieved for each infrastructure investment.