星空传媒

I think it鈥檚 fair to say that most 鈥渕ature鈥� democracies are in a spot of bother at the moment. The general sentiment in many countries is that most things are pretty broken and the status quo isn鈥檛 working for a huge percentage of the population.

Parties are elected on change mandates but, once in power, new leaders are finding it difficult to make material changes to fix problems because they don鈥檛 have enough money in the public purse to deliver all of their policy objectives. Voters get disillusioned quickly these days, so governments need to make changes equally quickly or face negative results at the polls. And the cycle begins again.

Is there a solution? The common refrain from politicians is that we need to achieve growth so that we can pay for these policies. But growth isn鈥檛 something that can be wished for and then it appears.

What I am learning from my new garden is that many of the fundamentals that are needed for growth take time to establish themselves, and a bit of patience is required. So this strategy 鈥� while important 鈥� is not putting money in the coffers quickly. And, unfortunately, the growth we are able to achieve has been much more limited than needed.

Many of the fundamentals that are needed for growth take time to establish themselves, and a bit of patience is required

That leaves us with a money problem. If growth is slow to come and tax increases are often politically unpalatable, the options are to give up on the policy objectives or to look to what the private sector can do.

According to the Global Pensions Asset Study produced by the Thinking Ahead Institute, there is $58.5 trillion invested in pension funds across the 22 major pension markets globally. And that鈥檚 just pensions. There is significant private sector capital seeking investments around the world.

Pension funds are a good option as they have invested significantly in infrastructure over the past decades because they like stable returns and good credit ratings. With the Mansion House Accord, 17 workplace pension providers have signalled their intention to invest at least 拢25bn in UK private assets such as infrastructure by 2030, which is a good start.

Yet we don鈥檛 have a financing vehicle that will allow us to tap into these funds. The now much maligned private finance initiative (PFI) and public-private partnership (PPP) deals that were delivered by the Blair and Brown governments were designed to deliver policy objectives but make it look like the government was not borrowing. The accounting rules have changed in recent years, so even if the government wanted to reinvigorate PFI and PPP, it may be difficult to achieve the same levels of investment.

Currently, the government is trying to use public funding for all of its capital investments, even though there are good examples of partnering with the private sector to finance policy objectives. For example, Places for London 鈥� the property development company of Transport for London 鈥� has plans to have 20,000 homes under development by 2031, many of which will be delivered in partnership with the private sector.

I would open up the big public sector balance sheet and make like successful corporate CFOs. Many large corporates have a portfolio of financing solutions, and one size does not fit all

To deliver more infrastructure investment in this parliament 鈥� or even in the next 10 years 鈥� we need to be bolder. If I were the chancellor, I would open up the big public sector balance sheet and act like successful corporate CFOs. Many large corporates have a portfolio of financing solutions, and one size does not fit all.

Public sector borrowing must continue to play a role in capital investment, but the government at all levels has a huge number of assets that could be leveraged for deals with the private sector if we can identify the opportunities for partnership with the private sector and ideally how multiple policy objectives can be delivered together so that the financing raised delivers more than one outcome. We can only do this if we look holistically at the objectives and the assets, rather than the traditional single asset focus.

As an example, one of the main health objectives of this government is to move health care into communities. An obvious place for these facilities 鈥� multi-disciplinary facilities which provide GP surgeries, mental health care, and even youth or senior centres 鈥� is on high streets across the country.

While the NHS might not own buildings on any given high street, many local authorities do, or would like to revitalise their high streets by replacing outdated buildings with important local services. And this is where the private sector could come in.

Developers could buy any needed land, build the health facilities and earn additional profits by developing housing above and around the health care. Health care is in the community, more housing is available, and the high street starts to be rejuvenated.

A public-private partnership developed in this way could easily benefit all parties if objectives are agreed, all of the stakeholders involved are committed to the solution, and it brings additional investment before achieving elusive growth or needing to raise taxes.

By seeking private finance for the opportunities that are attractive to the market, this frees up public sector capital for those things that only the public sector can deliver

This is not intended to be a fire sale of the family silver. The public sector still needs to own assets and control what is done on its land. What I am proposing is a more modern public-private partnership that establishes the public and private sector as equal contributors to and beneficiaries of delivering policy objectives and financial returns.

Private sector investment is not the answer for every infrastructure investment in the UK. The riskiest investments 鈥� and most certainly the ones that do not have an income stream that will repay the capital 鈥� cannot be financed by the private sector. But creative thinking about how to use the government鈥檚 assets to attract private financing and achieve multiple policy objectives is possible if looking at the entirety of the government balance sheet. By seeking private finance for the opportunities that are attractive to the market, this frees up public sector capital for those things that only the public sector can deliver.

If this seems relatively simple, why has it not been done before? It has many precedents, and these have tended to be cunning entrepreneurs developing properties by building things like the Metropolitan line in London. But developing a nationwide campaign of public-private partnerships is an exceptional task that will require significant iterations and optioneering.

Things might not even go to plan every time. But do we have any other option?

Beth West is on 星空传媒鈥檚 Funding the Future advisory panel, she is a former commercial director of HS2, head of development at Landsec and chief executive of East West Rail