The UK government has provided welcome clarity on its direction of travel for the next 10 years with the publication in June 2025 of the 10 Year Infrastructure Strategy, the Modern Industrial Strategy and various sector plans, including Clean Energy Industries. Taken together, these give a clearer picture of the government's priorities, the funding it will provide and the areas where it will be relying on the private sector. This Insight looks at the 10 Year Infrastructure Strategy. A separate Insight looks at the Industrial Strategy and the Clean Energy Industries Sector Plan.
The 10 Year Infrastructure Strategy is the first time the UK has set out a long term strategy that brings together economic infrastructure (transport, energy, water and wastewater, waste, digital and flood risk management) with housing and social infrastructure (hospitals, schools and colleges, and prisons and courts). The government will fund at least £725 billion of economic and social infrastructure over the next decade. This funding certainty should help government and industry plan further ahead and mean more efficient project delivery.
NISTA and the Infrastructure Pipeline
A key pillar of the 10 Year Infrastructure Strategy is the launch of the National Infrastructure and Service Transformation Authority (NISTA) to oversee the Strategy and identify and coordinate infrastructure needs. NISTA is also in charge of project delivery and appraisal, setting out a pipeline of infrastructure projects for the next 10 years and recommending projects with the biggest growth impact. The Infrastructure Pipeline will be launched as a digital online interactive dashboard in July 2025, giving details of capital and maintenance costs for projects of £25 million or more for economic infrastructure and £15 million or more for social infrastructure.
Private finance and using public-private partnerships (PPPs)
The big question on everyone's lips was whether the government would reintroduce some form of PPP model to bring in private finance to projects. The answer is a cautious yes: "The government will consider the use of PPPs in projects and sectors where there is a revenue stream, appropriate risk-transfer can be achieved, and value for money for taxpayers can be secured."
It goes on to say that the government is exploring the use of PPPs in certain types of primary and community health infrastructure; and for taxpayer-funded public estate decarbonisation projects such as the installation of solar PV, battery storage and low carbon heating solutions. A decision will be taken by Autumn Budget 2025 based on co-development of a model and business case between NISTA and the relevant department.
There will however be no return to PFI or PF2. Any new PPP model would reflect several improvements and be developed in consultation with industry.
Public finance institutions
We get the feeling that the government is more keen on using different public finance institutions and "financial transactions" to support business investment and catalyse growth. It has increased its funding envelope for financial transactions by £9.6 billion over the Spending Review 2025 period. So look out for investment opportunities from the National Wealth Fund (NWF), British Business Bank, UK Export Finance, the new National Housing Bank, and Great British Energy (GBE).
Privatised utilities
But much of the private investment in UK infrastructure (£30-£40 billion per year) actually happens in "economically regulated industries", in other words the electricity, gas, water and telecoms/digital networks that used to be state-owned but were privatised in the 1980s and 1990s. The government has been looking at the regulatory system and will be setting out an updated approach to economic regulation by the end of this year. It seems keen to keep using mechanisms like the Contract for Difference (CfD), Regulated Asset Base (RAB), capacity market auctions and the 'cap and floor' model, all of which get a mention in the Strategy.
The 10 Year Infrastructure Strategy is the first time the UK has set out a long term strategy that brings together economic infrastructure with housing and social infrastructure.
Social infrastructure
The government is taking a coordinated approach to social infrastructure. The priorities are Health, Education and Justice, which have long term maintenance budgets for the first time.
In health, there is a shift from hospitals to community healthcare. We can expect the first PPPs to be for community healthcare centres.
Housing
Housing's classification as infrastructure by the government is a change the sector has long campaigned for and has welcomed. The Strategy reiterates the government's commitment to the delivery of 1.5 million new homes this Parliament. The £39 billion for the new, 10 year Affordable Homes Programme was announced in the Spending Review, but the Strategy revealed a 10 year Rent Settlement for registered providers of social housing of CPI + 1% and a consultation on how rent convergence will work. Social landlords will also have equal access to government support for remediation funding for cladding. The new National Housing Bank, to be part of Homes England, will have new financial capacity and will support private investment into housing.
The government has also promised more details in a Long-Term Housing Strategy to be published later this year.
Transport
The Strategy does not make any new announcements on transport, but it recognises the importance of connecting regions to boost economic growth and the need to improve transport within cities, such as Leeds. There are some interesting graphs showing how regional UK cities are underperforming economically when compared to London and their European counterparts. The government is taking on board the National Infrastructure Commission's recommendations and providing funding to enable new transport investment in city regions. The new integrated settlements for mayoral strategic authorities (Greater Manchester and West Midlands this year, then in 2026-27 the North East, West Yorkshire, South Yorkshire and Liverpool City Region, plus an expanded settlement for the Greater London Authority) will give these places greater flexibility in how they use government funding.
There is an interesting comment in the Strategy about NISTA taking forward a study by early 2026 to explore ways of diversifying transport revenue streams to reduce reliance on central government grants. Land value capture is mentioned. We'll keep an eye out for that study.
Energy
Much of the Strategy reiterates previous announcements on energy, but it stresses that "electrification will be the primary route to decarbonisation" and a Clean Flexibility Roadmap (a plan to deliver the increase in GB's flexibility capacity needed for clean power by 2030) will be published in 2025.
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