Public/Private Partnerships

My Lords, the 10-year infrastructure strategy sets out our approach to private finance and infrastructure through a range of approaches. Public/private partnerships are one model, and the strategy sets out the circumstances in which these are considered. The 2025 Budget considered that public/private partnerships would be available for neighbourhood health centres and projects decarbonising the public sector estate. The Government will carefully consider the most appropriate model for each project to ensure value for money. All this is to be overseen by the National Infrastructure and Service Transformation Authority, or NISTA.

My Lords, I am grateful to my noble friend the Minister for that reply. I am pleased to hear today that the Chancellor has mentioned the possibility of involving mayors in these investment programmes. Can my noble friend ensure that we do some further work to keep the momentum going and that we look at the possibility, on the private side, of starting to offer shares to the public to participate in PPPs? Secondly, in furtherance of that, can we involve the Opposition in this too, so that we have joint partnership in getting greater investment?

We committed to getting Britain investing again to support our wider economy. In April, we launched targeted support with a new regulatory regime to improve access to financial guidance, moved the long-term asset fund into the stocks and shares ISA and welcomed the industry-led Invest for the Future campaign and risk warnings review to promote the benefits of investing to the public. The Invest for the Future awareness campaign has pointed out that more and more people are willing to invest their money rather than keeping it in cash ISAs. I confirm to my noble friend that the Chancellor of the Exchequer announced this morning that regional mayors will be involved as strategic partners in the delivery of the National Wealth Fund.

My Lords, will the Government speed up the identification of suitable projects and the granting of the necessary permissions? There is plenty of private capital that could help the Government. Will they make sure that enough risk is transferred to protect taxpayers’ interests?

The noble Lord makes some very good points. I do not know whether the noble Lord heard the Chancellor’s speech earlier today, but that is one of the things he wants to do: he wants to break down all the regulation, look at ways of investing more money into infrastructure, et cetera, and make sure that investment is there from the private sector. The National Wealth Fund has £27.8 billion in it, but we want to ensure that it releases £100 billion of investment over five years.

My Lords, so many PFIs and PPPs were inappropriate, poorly negotiated and cost the taxpayer a fortune. Frankly, they were motivated primarily to keep debt off the public books. Surely it is time to draw a line under those frameworks and update that approach with a much better record, such as joint ventures, concessions and targeted capital collaborations, as well as tackling the overall weakness in government procurement.

The noble Baroness has got the wrong end of the stick. We are not going to go back to the PFI contract system that we had in the past and which came to an end in about 2018. However, we are going to learn the lessons of what happened with PFI about flexibilities on contracts, investment and transparency, for example. It is also fair to say that where the PFI worked best, it gave us more schools, hospitals and doctors’ surgeries, and it helped us with Sure Start. It had some good points and we should not throw it all out just because there were some issues. We will learn from that and invest in a way that protects the public purse.

My Lords, the Minister said that there are still some issues with PFI contracts, particularly with hospitals. Can he confirm the scale of the debt that hospitals are still burdened with because of PFI? What are the Government going to do to renegotiate those contracts and, if possible, renege on them?

There is no possibility that we are going to go back to PFI, as I said. We have learned the lessons from that. I am not quite sure about the figure of total expenditure that is out there—I think there were some 700-odd projects, of which 600 are still in progress. We are going to make sure, when we invest using public and private money, such as in neighbourhood health centres, that public money goes to the best rewards. For example, there are going to be 250 neighbourhood health centres, of which 120 are due to be completed by 2030 and all 250 will be completed by 2035. That is good news that should be celebrated.

My Lords, does my noble friend accept that where some PFI projects went wrong it was usually because the people negotiating the contract at the local level on behalf of the public sector did not have the expertise to do so effectively? However, as a result of public/private partnerships between 1997 and 2010 in the NHS, we built 100 new hospitals. I therefore ask my noble friend: can we expect to see, as a result of what the Chancellor has said today, a big expansion in capital expenditure with public/private partnerships?

We will deploy public/private partnerships where it is in the best interest of the Exchequer and of the public to do so, because we need to protect taxpayers’ money. My noble friend is absolutely right, however, that we benefitted under PFI, with those 100 new hospitals, new schools and new health centres. That has to be celebrated. Yes, you learn lessons, but I hope we will go on to see more public/private partnerships in future—but only if it is in the interest of the Exchequer to do so.

My Lords, the Minister mentioned the private finance initiative. As he will probably be aware, many countries now, in many jurisdictions, are adopting new risk allocation systems built on PFI. These include—I have a long list here—France, Germany, Norway, Sweden, Finland, Canada, Australia, South Korea and Japan. What are we doing about this, as we were the inventors of it? Can we make some more developments in this direction, which could even help calm the bond markets and lower our appalling debt interest?

I thank the noble Lord for that question. The Government are learning from all these other jurisdictions. The 10-year infrastructure strategy set out the Government’s long-term plans for the economy and we are going to invest some £725 billion over that 10-year period—so some £72 billion a year. Obviously, if we are going to do that, some of it will end up being in public/private partnerships but, as I have said repeatedly, just like we would with any other scheme, we are only going to do what is in the best interest of the taxpayer and of the Exchequer.

My Lords, the Minister mentioned ISAs. Could he tell us why the Government give tax relief, via ISAs, to people who invest in overseas equities?

From next April, we are planning to reduce the allowance for investment in cash ISAs to £12,000 to encourage people to invest in stocks and shares ISAs. Figures for 2024-25 will be published later this month on how much more money is being invested in stocks and shares ISAs. We do not have the figures for the current year, but we will see from those figures the investment levels that are being transferred over to stocks and shares ISAs and how that money is going to be spent.

My Lords, will public/private partnerships form part of the Burnham Government’s new architecture for growth beyond the health sector, which the Minister has described, and decarbonisation? It is good to see the noble Lord, Lord Brooke, returning to the battle on this matter.

We will always look at public/private partnerships beyond health centres and beyond decarbonising the public sector, but, as I have continually said, we will do that only if it is in the best interest of the taxpayer and of the Exchequer. We are looking at how best to use public/private partnerships through the National Wealth Fund and we are bringing regional mayors into the system. That will broaden out what we can do with public/private partnerships beyond the two main initiatives that have been announced.