Government's response to Treasury Committee's report on use of private finance for infrastructure

Thirty-Ninth Report of Session 2024-25

HM Treasury

Government's use of private finance for infrastructure

Introduction from the Committee

The Treasury is responsible for allocating and controlling public spending,2 while the newly formed NISTA brings together functions of the National Infrastructure Commission and the Infrastructure and Projects Authority (IPA), and will support the implementation of a 10-Year Infrastructure Strategy.3 Private finance has been an important source of finance for public sector investments in economic and social infrastructure and there is a wide range of private financing models including the extensively used Private Finance Initiative (PFI). Sources of private finance for the initial capital investment include institutional investors (such as banks and pension funds) provided in the form of debt and equity, or related financial instruments.

The government has identified investment in new infrastructure as central to its mission to grow the economy, and has indicated that it plans to work in partnership with the private sector to deliver this investment.5 The latest National Infrastructure and Construction Pipeline, published in February 2024, identified around £1 trillion of potential capital investment over the coming decades. In the Autumn budget 2024, the Chancellor of the Exchequer announced an increase in public sector net investment, to a target of 2.6% of GDP with over £100 billion of additional capital invested over the next five years.

Based on a report by the National Audit Office, the Committee took evidence on 12 May 2025 from HM Treasury and the National Infrastructure and Service Transformation Authority (NISTA). The Committee published its report on 11 July 2025. This is the government's response to the Committee's report.

Relevant reports

• NAO report: Lessons learned: private finance for infrastructure – Session 2024-25 (HC 767)
• PAC report: Government's use of private finance for infrastructure – Session 2024-25 (HC 821)

Government response to the Committee  

Recommendation implemented

Recommendation implemented

5.The Treasury evaluates the costs and benefits of alternative options – including financingmodels–aspartoftheBusinessCaseprocesstoidentifythepreferredmodelfor each project and to ensure value formoney is achieved for each infrastructure investment.

Target implementation date: May 2027

Target implementation date: October 2026

2.Thegovernmentrecognisesthatastep-changeininfrastructureinvestmentwillrequire specialist private finance capacity and capability, as well as other specialist workforce skills. Government has engaged widely with industry during the development of the 10 Year Infrastructure Strategy, and will continue to work in partnership with the private sector and a wide range of stakeholders to unlock capital and build confidence in the UK.

• The government is already building capability across government by providing training for some aspects of private finance. NISTA holds network events for private finance experts across central and local government to facilitate networking, encourage the sharing of expertise, and improve learning. NISTA also provides training for PFI contract managers on several topics including contract expiry and will be publishing PFI contract and performance management guidance later in 2025 to help authorities improve the management and performance of their contracts. Finally, the Treasury, NISTA and UK Government Investments lead on the government's corporate and project finance professions which support learning and development, postmortem analysis and professional skills.
• In the 10 Year Infrastructure Strategy, the government committed to understand the UK's infrastructure skills requirements – to better identify where it needs to provide support. Skills England will collate a national picture of skills gaps by working closely with mayoral strategic authorities, while bodies such as the Office for Clean Energy Jobs will build a clear picture in individual sectors. The Infrastructure Pipeline data will also provide insight on the scale and range of construction skills required, which will support Skills England in understanding and addressing critical skills gaps. The government will expand the scope of these existing initiatives to capture how the public sector can build, attract and retain the necessary private finance skillset and workforce to deliver greater infrastructure investment.

Target implementation date: May 2026

money is achieved. The government has learned the lessons from the past and is applying these learnings to current and future projects. For example, the lessons learned from Hinkley Point C helped lead to Sizewell C's pioneering use of a Regulated Asset Base model to more effectively allocate risk between the parties and which enabled the conclusion of a private equity raise.

Recommendation implemented