Key Takeaways:
1. Reframe private investment as a strategic tool, not a last resort: Government must be clear from the outset what risk is being bought and what value it unlocks, not treat private finance as a fallback when public funding runs out.
2. Look beyond the railway boundary to create investable propositions: Rail's greatest untapped potential lies in dual-use infrastructure, energy, connectivity and placemaking; these are the opportunities that will attract serious private capital.
3. Adopt the Mutual Investment Model as a mainstream option for UK rail: Wales has proven this works. A capped return, a public equity stake, and genuine transparency offer a credible, less rigid alternative to PFI that Treasury should now get behind.
4. Match the model to the scheme – and resist the temptation to standardise: There is no one-size-fits-all solution. The priority must be finding the right structure for each project and being ruthlessly clear about who holds which risks and why.
5. Stop waiting for investors to come to you: The pipeline must become a proactive prospectus. Government should be sitting down with investors from day one, offering clarity on opportunities, certainty on decisions, and a clear front door.
6. Give regions the decision-making power to match their investment responsibilities: DfT should focus on the 'how', not the 'what'. With local coinvestment requirements rising sharply under TCR, devolved authorities need genuine autonomy to attract and deploy capital at scale.
Why Private Investment Matters
The core argument was one of fiscal constraint – the public sector simply cannot fund everything it needs. Beyond the cost of capital, participants stressed that what government is really purchasing through private finance is risk transfer, and that this distinction is critical from the outset of any scheme.
The private sector can bring value beyond money alone – innovation, efficiency, and the ability to integrate transport infrastructure with wider development. Examples include the potential for rail stations to anchor broader mixed-use hubs, and mass transit investment unlocking wider development entirely funded by private capital.
The rising cost of gilts was also raised as a significant factor. Participants noted that if the right risk model can be structured, institutional capital could, in some circumstances, be priced on a par with, or even slightly below, government borrowing costs, making the case for private finance more compelling than it has been for some time.
Thinking Beyond the Railway
A recurring theme was the opportunity to attract inward investment by thinking beyond rail operations alone. Examples discussed include:
1. Station Development and Placemaking
Stations are catalysts for economic growth, job creation, and regeneration. The discussion noted that a station roof replacement, for example, need cost only marginally more if designed to support an office development above it – generating a capital receipt to reinvest in the station itself.
2. Telecomms on the Railway: Dual-Use Infrastructure
Network Rails Project Reach involves deploying high-capacity fibre along the railway corridor through an investment partner, who funds the infrastructure and receives the right to commercialise half of the fibre capacity. The railway gets the connectivity it needs at no direct cost, while the investor makes a return. The project is already operational on the Great Western route, with roll-out to further routes under consideration.
A related example addressed mobile connectivity. Mobile operators may be reluctant to invest in rural tunnel coverage where passenger numbers do not justify the return – but they are interested in the opportunity of installing high-quality coverage at major stations, in turn driving customer satisfaction scores.
3. Green Energy and Infrastructure Corridors
Network Rail are working to bring private capital in to develop solar and other renewables facilities close to the network, with railway off-take arrangements. In this context the railway corridor can be treated as a piece of strategic national infrastructure –potentially hosting high-voltage electricity transmission or operating as an energy infrastructure corridor, shared with data centres and other high-demand users. These ideas involve technical and regulatory complexity but the concept of infrastructure corridors serving multiple purposes deserves serious strategic attention.
The Mutual Investment Model (MIM): A Promising Alternative
The MIM was developed in Walesi specifically to address the limitations of PFI – its rigidity, lack of transparency, and the perception that the private sector captured excessive returns. Key features of the model include:
- A shared risk and reward structure, with both public and private partners genuinely invested in delivery
- A 20% equity stake held by the public sector, with a Public Interest Director appointed on the basis of that stake, enabling gain share across public and private sectors if the project outperforms financial expectations.
- A cap on the rate of return, ensuring the public sector is not exposed to unlimited private profit
- Published transparency over what has been paid out and what has been returned
- Capital kept off the public balance sheet, providing fiscal headroom for devolved governments with limited borrowing powers.
The model has been used to fund a new hospital in south Wales, a school building programme, and a further projects – together representing over half a billion pounds of investment. Participants suggested that it could be applied to transport and rail investment in England, and potentially rolled out more widely across the UK.
The view was expressed that genuine shared risk and reward creates a stronger cultural incentive for delivery, since both parties need the outcome to succeed.
Matching the Model to the Scheme
No single model suits all projects. The history of UK infrastructure projects with private finance has been characterised by periods when one model (PF2, then RAB) was applied to everything, regardless of fit. Many projects currently described as candidates for private investment are not, in fact, structured in ways that are investable – particularly where they do not generate a monetisable return.
The key principle articulated was: be clear what risk is being transferred and ensure it is held by those best placed to manage it. The collapse of Carillion was cited as a cautionary example of what happens when risk is transferred inappropriately – pushed onto a party unable to absorb or manage it.
For some scheme types – particularly depots in locations with obvious long-term demand – it is possible to place most risk with the investor, because certainty of use is demonstrable. For others, such as ground conditions risk, the public sector should retain it, since it is not something a private contractor can sensibly price or manage.
The Infrastructure Pipeline: From Passive to Proactive
The current approach places the onus on investors to find opportunities. They are expected to approach government, identify a suitable scheme, and work out how to engage – when the 'front door' is itself unclear.
3/5
The panel argued that the approach needs to be fundamentally reworked:
- Government should proactively go out to investors
- What projects are available, what opportunities looks like, and what returns are available
- Genuine collaboration: sitting down with investors from the beginning of a project's development
- Faster decision-making is essential to rebuild investor confidence. The current process – in which novel structures must pass through DfT, then Treasury, then potentially the ONS for balance sheet classification – is slow and sequential, whereas all parties essentially want the same outcome
- It needs to be clearer which projects need private investment, which are for public funding, and which involve a blend – so investors can price their time and risk accordingly
One participant described a rare example of what good looks like: a previous occasion on which a senior figure brought all the relevant public sector parties into one room, around the same side of the table. It was described as the only time the process had felt genuinely collaborative – and the panel's view was that this should be the norm, not the exception.
The ORR has publicly raised these concerns with Treasury and DfT directly, calling for more engagement with investors and the supply chain to understand how private funding can support schemes before they are packaged for the market.ii
Devolution: Changing the Relationship Between Centre and Region
A key distinction is between the 'what' and the 'how': decisions about what a region needs should rest with the region and its elected representatives; DfT's proper role should be to scrutinise whether projects are being done well – the commercial, financial, and management case – not to re-litigate the case for the investment itself.
One devolved authority’s mass transit programme was cited as a live example: a £2.7–2.8 billion project for an authority operating at a scale it has not previously attempted. The question was raised sharply: why is central government signing off on the strategic mode choice for a project that the region has decided it needs?
The panel also raised the challenge of co-investment requirements. Under the City Region Sustainable Transport Settlements (CRSTS) programme has historically expected local contributions of at least 15%, but the Transport City Regions (TCR) fund has yet to confirm the percentage contribution required.
More broadly, participants noted that regional and combined authorities are increasingly equipping themselves to think proactively about investment and that this capacity, combined with the flexibility that devolved institutions have relative to central government, creates a real opportunity if properly partnered.
Conclusion
Private investment in UK rail is not a question of whether, but how – and the message was consistent: the models exist or can be created, the capital is available, and the appetite from investors is real. What is missing is the proactive public proposition, the collaborative structures, and the decision-making speed that would allow the pieces to come together.
For more information, please contact RIA Policy and Public Affairs Director Robert Cook, at Robert.Cook@riagb.org.uk and 020 7201 0777 / 07951 776 874.
i Welsh Government, Mutual Investment Model for Infrastructure Investment.
ii Office of Rail and Road, Deep dive review of the Rail Network Investment Framework – Letter to HM Treasury. 2025.