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The committee warns that insufficient information on forthcoming projects has worsened skills shortages in the sector and threatens the government’s infrastructure ambitions. As the government seeks to escalate investment in critical infrastructure such as schools and power plants to stimulate economic growth, the report warns that prior missteps with private financing models must be addressed to ensure value for taxpayers.

The National Infrastructure and Construction Pipeline (NICP) is designed to outline investment programmes across key areas such as energy, transport, flood defences and housing. However, the PAC’s findings reveal significant shortcomings in how this pipeline has been managed. The NICP was not published for multiple years – 2019, 2020 and 2022 – and gaps in data have made it difficult to compare plans over time. Crucially, the report notes a lack of transparency about past project performance and delivery schedules for future projects.

To tackle this, Treasury and the newly-formed National Infrastructure and Service Transmission Authority (Nista) have committed to biannual public releases of a detailed investor-focused pipeline, clarifying financing models suitable for each project and timelines for government support.

This absence of a coherent and credible project pipeline is having wider consequences, the PAC says. Public and private sector organisations are struggling to attract, develop and retain staff with specialist commercial and financial skills essential to delivering infrastructure projects, particularly those involving private finance. Such a skills deficit risks undermining the government’s capacity to invest effectively, with some talent being lost abroad amid the uncertain environment.

The committee also raised concerns over the ongoing Private Finance Initiative (PFI) contracts still held by public bodies. Across 665 active agreements, charges totalling £136bn are expected by 2052-53, with half due to expire within the next decade.

Issues such as inefficient procurement, poorly constructed contracts, and mispriced risks plagued earlier projects, the PAC states. Crucially, the Treasury’s prior focus on keeping investments off the government’s balance sheet – thereby obscuring true debt levels – distorted financing decisions, prioritising accounting optics over value for money. Although the Treasury acknowledges these errors and promises improved oversight and mechanisms to safeguard taxpayers’ interests, it has yet to clarify how private financing models will align with specific infrastructure projects.

The PAC warns that managing the condition of PFI assets – such as school buildings – will require careful oversight to ensure only quality infrastructure is returned to public ownership.

Challenging the assumption that transferring risk to the private sector equates to effective risk management, the PAC emphasises that the government may still have to intervene if vital infrastructure suppliers fail, as seen in the collapse of Carillion. The committee recommends the introduction of a centrally-developed risk management toolkit to guide public bodies handling infrastructure projects.

The report further criticises the lack of clarity from HM Treasury on which financing models should be used for different project types.

Another crucial deficiency is the absence of a centralised record of private finance projects, which hampers the Treasury’s ability to identify patterns and drive value-for-money improvements. Examples such as the £9bn Regulated Asset Base model investments in Thames Tideway Tunnel and Heathrow Terminal 5, alongside the £14.2bn Sizewell C nuclear power station plan, illustrate the scale and diversity of financing models beyond PFI. Yet, data collection and performance monitoring for these newer models remain inconsistent or incomplete.

Identifying financing approaches tailored to sectors like energy, transport and communications could improve value for money, encourage investment and foster competition. The PAC also calls for a central public database on private finance in infrastructure that would enable better analysis of trends and effectiveness in the use of private capital.

Skills shortages within public bodies also threaten delivery ambitions. Complex private finance arrangements demand specialist commercial and financial expertise, which has eroded due to a volatile infrastructure environment. The Treasury and Nista are responding with training initiatives and expert pools to bolster this capacity. Additionally, the government’s recently-released 10-Year Infrastructure Strategy includes a focus on addressing sector-specific skills gaps via Skills England.

Risk allocation remains a thorny issue. The report warns against the misconception that transferring risk to the private sector automatically equates to effective risk management. Past failures, including the collapse of Carillion, demonstrate that the public sector often has to intervene, undermining the purpose of private risk transfer. The PAC urges the Treasury to develop an infrastructure financing toolkit to better quantify, allocate and manage risks, including contingency plans for supplier failure.

Nista is currently developing an infrastructure pipeline that will be “investor focused” and is due to be released any day now.

PAC chair Geoffrey Clifton-Brown MP said: “It is a truism that any investor places a high premium on reliable information, without which it is hard to proceed. Of particular importance are accuracy and certainty of contract specifications at the outset, and relative certainty that the government won’t change the contract specification at a later date. Our scrutiny has found a woefully obscured picture for any seeking to invest in big infrastructure projects in the UK, with a corresponding drain of skills overseas.

“Without a long-term, consistent pipeline giving an idea of what to expect in years to come, UK infrastructure risks becoming stony ground for any investor. Government must also move to make sure the right finance model is used for the right project, and to support all public bodies in understanding how best to manage both the contracts themselves and the risk in taking them on.

“The recently-published 10-Year Infrastructure Strategy lays out ambitions which any government would harbour – driving growth, clean energy, delivering hospitals, schools, prisons  – and encouraging private investment. As with a number of areas of scrutiny for this Committee, the government has articulated its desired destination, but in an environment where the exact route remains difficult and unclear. If our recommendations are followed, we hope our report will act as a guide to the government to help it deliver badly-needed growth, a revived skills base, and the better-quality infrastructure this country needs.”

Sector commentary

Institution of Civil Engineers (ICE) director of policy and external affairs Sam Gould said: “Today’s Public Accounts Committee report echoes the ICE’s view that developing a credible pipeline of projects is essential for investors’ and industry’s long-term planning.

“The forthcoming publication of the project pipeline will be a significant step forward, but there are still big jobs ahead for the government and Nista.

“Increasing commercial and financial skills across public sector bodies should be a priority, and the PAC’s recommendation to publish a central database on using private finance to fund public projects is a good one.

“The public’s views should also be considered.

“ICE research has found that 62% of people think information about projects is poorly communicated.

“There is a clear opportunity to improve the narrative around infrastructure and the benefits it delivers.”

Turner & Townsend UK managing director, infrastructure James Corrigan said: “The report aligns with the views of many of us across the infrastructure and construction sectors.  As with any industry looking for significant private investment, we need to be able to offer long-term clarity over the pipeline.  We also need to create confidence that this pipeline won’t be impacted by changing political cycles, and that there is a coordinated approach between public bodies and private organisations to scale up the capacity and skills needed to deliver.

“It’s a delicate balance, as these three elements are intrinsically linked.  Hopefully, this report will provide further drive for industry to work together to build the certainty and trust we need.  The positive recent announcements from government have gone some way towards that – from the creation of Nista to the infrastructure strategy, and openness to new forms of public private partnership.  It’s our responsibility to take this and run with it – and put the years of unclear infrastructure planning behind us.”

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