Introduction
The Railway Industry Association kicked off 2026 with a workshop to explore private investment models, and the potential employment of these models to drive forward rail projects. Participants were from across the public and private sector.
The Government has signalled an intention to explore the potential of private investment, in the UK Infrastructure: A 10-Year Strategy. RIA and our members believe there are multiple means with which private investment should be considered as an attractive mechanism to deliver rail projects, across multiple different asset types.
This workshop explored the respective needs of the public sector and investors – both of which are crucial to address if we are to succeed in bringing in new investment. It then went on to consider the opportunities, and potential barriers to five potential models/mechanisms that could be used to leverage investment into rail.1 .
Participants recommended prioritising further work to consider the application of longterm infrastructure concessions; Station Investment Zones; and land value capture mechanisms.
1 The models were defined in the pre-reading pack, not repeated here.
Session 1: Public Sector and Private Sector Needs
We discussed what the key criteria are for successful private investment from a public sector value perspective, and from the perspective of investors.
The discussion emphasised that successful private investment in rail depends on a shared framework in which public-sector discipline and investor confidence reinforce one another. Where the public sector provides clarity on objectives, risk and pipeline, and investors are offered stable, bankable structures with returns aligned to risk, private capital can play a meaningful role in supporting long-term rail investment.
Public Sector Value
Balance sheet and fiscal discipline
The public sector requires clarity on how private investment interacts with fiscal rules, particularly balance-sheet treatment. Participants noted that investment decisions are often driven by accounting classification rather than whole-life value. A credible framework must therefore explain how risk transfer, guarantees and revenue support affect balance-sheet outcomes, and ensure that privately financed options can be assessed on value-for-money grounds rather than headline cost of capital alone.
Value for money and whole-life outcomes
Public investment decisions must demonstrate value for money, but participants questioned whether current appraisal sufficiently captures whole-life performance, asset value and long-term efficiency. Private investment models are most compelling where they can demonstrably improve delivery certainty, reduce lifecycle costs or unlock additional funding, rather than simply substitute public capital.
Appropriate risk transfer
Risk should be transferred only where the private sector is better placed to manage it. Construction, delivery and operational risks can often sit with private partners, while policy, planning and demand risks are typically better retained or shared by the public sector. Poorly designed risk transfer was seen as a key cause of past failures and a deterrent to credible investment.
Pipeline certainty and strategic coordination
A visible, prioritised pipeline of projects is essential. Participants stressed that sporadic or one-off transactions increase costs and reduce investor confidence (and hence cost of capital). The public sector therefore needs strong coordination across departments and tiers of government to present a coherent programme of opportunities, supported by clear sponsorship and decision-making authority.
Institutional capability and governance
Public bodies must have the capability to structure, procure and manage complex longterm contracts. This includes commercial skills, data quality and governance arrangements that allow flexibility without undermining accountability. Where capability is weak, even well-designed investment models are unlikely to succeed.
Investor needs
Revenue certainty and repayment mechanisms
Investors require clear, predictable revenue streams over the life of the asset. This may include regulated charges, availability payments or other contracted income. Exposure to volatile or politically sensitive revenues – such as the farebox – needs to be carefully managed, with downside protections clearly defined.
Transparent and balanced risk allocation
Investors expect risks to be clearly defined, priced and allocated to the parties best able to manage them. Particular emphasis was placed on protection from unmanageable policy change, planning delays and changes in law. Where demand risk is transferred, it must be realistic and appropriately compensated.
Stable legal and regulatory framework
Long-term investment depends on confidence in the stability and enforceability of contracts and regulation. Investors need assurance that terms will not be unilaterally changed and that regulatory processes for setting returns or charges are transparent, independent and predictable.
Bankability and financing credibility
Investment structures must support both equity and debt. This requires familiar contractual models, clear security packages and credible downside scenarios. Lower perceived risk translates directly into lower financing costs, benefiting both investors and the public sector.
Scale, repeatability and pipeline visibility
Investors place a premium on scale and repeatability. Projects must be large enough to justify transaction costs and ideally form part of a wider programme or portfolio. A clear pipeline reduces risk, lowers costs and encourages long-term market participation.
Session 2: Private Investment Models
Land Value Capture mechanisms
Discussion considered how LVC can be used as a practical and scalable tool to support rail investment, while also delivering wider economic and community benefits.
Participants emphasised that LVC is most effective when framed as shared value creation rather than a narrow revenue-raising mechanism, aligning transport investment with housing delivery, placemaking and long-term economic growth.
LVC as shared value
LVC was consistently described as a means of capturing a portion of the value uplift generated by transport investment and reinvesting it to support further improvements. Rail infrastructure can unlock significant land and development value by improving accessibility and confidence in an area. If structured effectively, this uplift can fund not only transport upgrades but also complementary commercial, residential and amenity developments, creating a reinforcing cycle of growth.
Planning reforms and expanded development corporation powers were seen as enabling this approach, particularly around existing stations and corridors. Intensification, high-quality placemaking and environmental improvements were viewed as critical to maximising long-term revenue streams, whether through fares, commercial activity or development contributions. LVC’s flexibility – across asset types, geographies and funding models was seen as a particular strength in the rail context.
Funding scope and complexity
Participants highlighted the importance of clearly defining what LVC funding is expected to cover. Transport schemes often require investment beyond static infrastructure, including rolling stock and operating costs, to deliver the capacity and service levels that underpin value uplift. Questions were raised about whether developments benefiting from new stations or connectivity improvements should contribute to wider route or system upgrades, as has occurred in past rail schemes.
There was also debate about whether LVC funding should extend to non-transport interventions such as health, education or public realm improvements. While such investments may strengthen overall place-based outcomes, combining multiple sectors within a single funding pot risks complicating appraisal and weakening investment clarity.
Planning, governance and leadership
Planning certainty and political leadership were identified as critical enablers of LVC. Development corporations were seen as effective vehicles for delivering LVC at scale, given their ability to assemble land, manage planning risk and coordinate transport and development objectives. However, local political support is essential, as LVC can face resistance from those expected to contribute, including developers, businesses and residents.
New greenfield developments were generally seen as easier environments for LVC, while brownfield and established urban areas may offer greater long-term value but involve longer timescales and higher complexity. Early and sustained engagement with elected leaders was viewed as crucial to building durable support.
Financing, risk and timing
A key challenge discussed was the timing gap between upfront infrastructure investment and the later realisation of LVC revenues. Capital expenditure is often required years before increased revenues materialise, raising questions about who finances the initial investment and who bears revenue risk.
Participants explored whether risk-sharing approaches could improve investability, particularly given long payback periods and economic volatility. Negotiated or sitespecific contributions were seen as one way to align incentives and reduce uncertainty, while more standardised mechanisms such as the Community Infrastructure Levy (CIL) were viewed as constrained by timing and flexibility. Resilience to shocks, such as demand changes or wider economic downturns, was seen as an important consideration in scheme design.
Public-sector coordination and capability
Strong public-sector leadership was viewed as indispensable. Local authorities and mayoral combined authorities are often best placed to align transport, planning and economic strategy, while national bodies have a role in enabling land assembly and integration with existing rail assets. Platform4 was identified as well positioned to support LVC around the railway, particularly where schemes interact with operational constraints.
Effective LVC therefore requires coordination across tiers of government and policy areas, supported by clear governance and delivery capability.
Viability and geographic variation
Finally, participants noted that LVC is not equally viable everywhere. Outside highdemand urban areas, demonstrating sufficient value uplift can be challenging, raising questions about how LVC can be adapted or supplemented to support investment more evenly across the network. Nevertheless, UK and international examples – including major urban extensions and integrated rail-property models – demonstrate that, where conditions are right, LVC can play a significant role in funding and shaping rail investment.
Station Investment Zones / place-based SPVs
There was broad consensus that the model is worth further exploration, particularly as a mechanism to integrate transport investment with wider economic outcomes and to create investable propositions capable of attracting private capital.
Strategic rationale
Participants agreed that stations represent natural anchors for development, providing a focal point for coordinating land use, transport, utilities and placemaking. Expanding the investment boundary beyond the station estate to a wider catchment can help capture the full value generated by rail investment and recycle it into further transport and development activity.
This approach aligns with the growing policy emphasis on place-based growth, housing delivery and regeneration alongside transport outcomes. Station Investment Zones were seen as a practical way to bring together these objectives within a single framework, enabling more holistic decision-making and stronger commercial propositions than traditional, asset-by-asset investment models.
Coordination and leadership
A central question was who is best placed to convene land, transport, housing and utilities around stations. At a national level, participants highlighted the need for collaboration between departments responsible for transport, housing, planning and public finance to establish a clear enabling framework. This would include consistent standards, documentation and evaluation approaches to support investor confidence and replication.
However, given the place-specific nature of station-led regeneration, strong local leadership was viewed as essential. Mature mayoral combined authorities were identified as natural early adopters, given their strategic transport powers, spatial planning responsibilities and democratic mandate. Transport for Wales was also cited as a devolved body with the capability to lead a similar approach.
Participants stressed the importance of balancing national consistency with local flexibility. A national framework could reduce transaction costs and provide clarity for investors, while still allowing local areas discretion over phasing, land use mix and placespecific outcomes. Cross-boundary schemes were recognised as particularly complex, reinforcing the need for strong development corporations with clear statutory powers, streamlined governance and formal partnership boards.
Outside mayoral areas, participants suggested focusing on corridors or clusters of stations capable of generating investable returns, provided there is clear cross-party political support and a designated lead planning authority to drive delivery.
Revenue stacking and bankability
A significant part of the discussion focused on which revenue streams within a Station Investment Zone are genuinely bankable, and which should be treated as upside rather than core financing assumptions. Participants emphasised the importance of disciplined
revenue stacking, with a clear separation between basecase revenues and more speculative or variable income streams.
More bankable revenues were seen to include land value capture mechanisms linked to clearly defined development rights and delivery phasing, as well as contracted or ringfenced local revenues where legal robustness and multi-year certainty can be demonstrated. Certain grant streams may also be bankable where long-term commitments are in place.
Less bankable revenues were identified as short-term competitive grants, some “net zero” funds without durable allocation, and optimistic commercial income assumptions lacking evidence or downside protection. Participants stressed the need for robust financial engineering, including scenario modelling and stress testing for phasing, demand, inflation and interest rates.
There was strong agreement that Station Investment Zones should avoid reliance on single income streams. Instead, diversified revenue bases, clear revenue waterfalls and appropriate protections such as reserves, covenants and step-in rights – were seen as essential to ensure resilience if individual elements underperform.
Rail system complexity and capability
Participants noted that station-based investment cannot be considered in isolation from the wider rail system. Service patterns, capacity constraints and operational boundaries can have material implications for both capital and operating costs. Decisions around through-running versus terminating services, or the treatment of services at network edges, can significantly affect the viability of station-centred investment models.
Capability gaps within some authorities were also highlighted, particularly in negotiating complex funding settlements or engaging effectively with central government. Addressing these gaps was seen as important if the model is to be scaled beyond the most experienced areas.
Delivery vehicles and next steps
National bodies were seen as having a role in supporting Station Investment Zones, particularly around land assembly and integration with existing rail assets. Platform4 was identified as potentially well positioned to support this agenda, although questions were raised about whether it has sufficient scale, capital and mandate to underpin a national programme.
Overall, the discussion concluded that Station Investment Zones offer a credible and potentially scalable approach to aligning rail investment with housing and regeneration objectives. Success will depend on strong coordination, disciplined revenue structuring, capable delivery bodies and clear political leadership at both national and local levels.
Long-Term Infrastructure Concessions
Participants recognised that concessions can offer clear benefits in the right circumstances, but also highlighted significant commercial, institutional and fiscal barriers that limit their wider application across the rail network.
Strategic rationale and opportunities
Participants agreed that long-term concessions can be effective where projects are well defined, of sufficient scale and capable of supporting long-term private risk-taking. A key attraction is their focus on whole-life performance: by combining financing, construction, operation and maintenance within a single contract, concessions can incentivise innovation, efficiency and outcomes that go beyond minimum specifications.
There was interest in both pre-construction and post-construction concessions. Preconstruction concessions offer greater scope for whole-life optimisation and innovation, while post-construction concessions may allow the public sector to bring in private capital once delivery risk has reduced, particularly for operational phases of assets.
Concessions were seen as potentially suitable for certain station upgrades or discrete infrastructure assets, provided outputs are clearly specified and asset condition risks are well understood. Bundling assets – either geographically or by asset type – was highlighted as a way to improve investability by increasing scale, clarifying risk allocation and defining clearer contractual boundaries. Scale was seen as critical, with participants suggesting that projects below c. £100m struggle to attract serious institutional interest.
Participants also noted that concessions can create strong incentives to generate additional value, including through operational efficiencies or third-party revenues, where these are compatible with public objectives.
Revenue, risk and commercial structure
A central issue was how revenues should be structured. Participants questioned whether farebox revenues can realistically be transferred to the private sector, given political sensitivities and the subsidised nature of rail. In many cases, availability-based payments or regulated charging frameworks were seen as more credible foundations for concessions, with commercial and ancillary revenues treated as upside rather than core repayment sources.
There was broad agreement that concessions tend to work best for new-build assets, where risks can be more clearly priced and managed from the outset. Older assets, particularly stations and complex network interfaces, introduce uncertainty around condition, future enhancement needs and integration with the wider system. Unless these risks are carefully mitigated, they can significantly increase financing costs.
Participants also noted that a number of early PFI contracts across infrastructure sectors are approaching expiry. This was seen as an opportunity for the public sector to reflect on lessons learned – particularly around flexibility, contract management and risk transfer –and to consider how concession models might be adapted to better suit current policy and market conditions.
Barriers to wider adoption
Despite their potential, participants identified several barriers that continue to constrain the use of concessions in rail. From an investor perspective, rail concessions are often perceived as high-risk relative to expected returns, particularly where construction delays defer revenue for long periods. This is a particular concern for debt investors, whose returns depend on predictable and timely cash flows.
Contractual flexibility was another recurring theme. Investors value the ability to adapt over long concession periods, but not all public-sector clients were seen as having the capability or confidence to manage flexible contracts without undermining value for money or control. Relatedly, participants noted concerns about pricing uncertainty, with some investors perceiving excessive optimism or “guesswork” in public-sector assumptions on costs, revenues and risk transfer.
Cash-flow constraints were also highlighted, especially in rail where assets often require ongoing investment to maintain performance. The distinction between enhancements and maintenance was seen as particularly challenging from both a commercial and balance-sheet perspective.
Pipeline visibility emerged as a decisive factor. Investors need confidence not only in individual projects but in a sustained programme of opportunities to justify investment in capability and market entry. The perception that concession models are frequently classified as on-balance-sheet further reduces incentives for public sponsors to pursue them, reinforcing a cycle of limited use and limited institutional learning.
Lessons from experience
Participants reflected on lessons from rail and wider infrastructure schemes, including High Speed 1, Docklands Light Railway, Silvertown Tunnel, High Speed Two and East West Rail. These examples underline the importance of strong public-sector capability, detailed asset knowledge and clear governance when entering long-term contractual arrangements.
Overall assessment
Overall, the discussion concluded that long-term infrastructure concessions can play a role in UK rail, but only in carefully selected circumstances. They are most likely to succeed where projects are large, risks are clearly defined and allocated, and revenue mechanisms are robust. Without clearer pipelines, stronger public-sector capability and greater confidence around balance-sheet treatment, concessions are likely to remain a niche rather than a mainstream delivery model for rail.
Regulatory Asset Base (RAB) Models
While participants recognised the strengths of RAB frameworks in theory, there was broad agreement that their application in rail is challenging and likely to be limited to specific, tightly defined use cases.
Rationale and investor appeal
RAB models are designed to support infrastructure with high upfront capital costs; long asset lives and relatively predictable long-term operating requirements. By allowing investors to recover costs over time through regulated user charges, RAB frameworks help manage the mismatch between early capital expenditure and later revenue flows, while incentivising whole-life cost optimisation.
From an investor perspective, RAB models offer a combination of medium-term certainty and adaptability. Price control periods provide predictable revenues, while periodic regulatory resets allow costs, demand assumptions and returns to be adjusted over time. This balance has underpinned strong investor appetite in regulated monopoly sectors, where demand is stable and revenues are effectively “captive”.
Structural challenges in rail
Participants agreed that rail differs fundamentally from sectors where RAB models are most effective. A central challenge is the difficulty of defining discrete infrastructure assets with clearly attributable revenue streams. Most rail journeys span multiple sections of infrastructure, making it hard to link passenger revenues to specific assets in a way that investors would view as robust or durable.
This problem is compounded by the structure of rail charging and subsidy. Rail revenues are often pooled across networks, and recent reforms to track access charging further weaken the direct relationship between asset usage and income. In practice, this means that applying a RAB model to most rail infrastructure would require contractual availability payments or other public-sector support, moving away from a pure userfunded approach.
Participants contrasted this with road and utility examples, where users have limited alternatives and charges can be clearly associated with a defined asset. The proposed RAB for the Lower Thames Crossing, which would include the existing Dartford Crossing, was cited as an example of how multiple captive revenue streams can be combined to create a credible investment base.
Potential niches for RAB in rail
Given these constraints, discussion focused on where RAB models might nonetheless be viable within UK rail. Large station developments were identified as the most promising opportunity, as stations can often be treated as more self-contained assets with identifiable passenger flows, commercial revenues and development benefits. The potential use of a RAB-style approach at Euston Station was noted as a relevant example currently under consideration.
For station-based RAB models to attract private investment, participants highlighted several prerequisites: careful risk allocation to protect investors from volatile demand; a clear legal and regulatory framework recognised by capital markets; and an explicit, supportive government policy position. Public co-funding through grants was also seen as important to reduce financing costs and strengthen underlying revenue streams.
Beyond stations, participants suggested that certain unique or self-contained rail assets – such as dedicated airport connections – may be more compatible with a RAB approach. In these cases, demand is relatively stable, alternatives are limited, and revenues can be more clearly ring-fenced.
Design, governance and political considerations
A number of technical and political challenges were also identified. Defining the asset perimeter is critical: combining old and new assets within a single RAB can reduce transparency and deter investors, particularly if legacy condition risks are imported into the regulated base.
Political acceptability was seen as a further constraint. RAB models ultimately rely on user charges to fund investment, and increases in fares or access charges can be sensitive in rail, where affordability and subsidy are already contested issues. Strong regulatory governance and clear communication of long-term benefits were therefore viewed as essential.
From a financing perspective, banking markets typically require RAB schemes to be of sufficient scale and very low risk. Regulatory stability is also critical: investors expect multi-year price control periods and predictable methodologies, with concerns that instability in one regulated sector could undermine confidence more broadly.
Finally, participants noted that RAB valuations are based on historic investment and depreciation rather than market value, which can make asset value harder to explain to investors unfamiliar with the model.
Overall assessment
Overall, the discussion concluded that while RAB models offer clear advantages for long-term infrastructure investment, their application in rail is likely to be selective rather than systemic. They may be appropriate for large, self-contained assets with identifiable revenues – particularly major stations or unique connections – but are unlikely to translate easily to the wider rail network without significant public underpinning.
Rolling Stock Leasing Models
While participants generally agreed that the model is unlikely to be directly transferable to most fixed infrastructure, there was strong consensus that its underlying principles remain highly relevant.
Strengths of the leasing model
The rolling stock leasing model has successfully mobilised large volumes of private capital by separating asset ownership from operations. Specialist leasing companies raise long-term debt and equity to finance fleets, which are then leased to operators under long-term contracts. This structure provides investors with predictable revenues and clearly defined risks.
Participants highlighted that longer lease terms help drive down financing costs, delivering better value over the life of the asset. The model encourages whole-life asset management, as lessors retain residual value risk and therefore have a strong incentive to maintain and improve asset condition and performance. The scale of capital available to leasing companies was seen as evidence that rail assets can be attractive to institutional investors when risk allocation and revenue certainty are clear.
Areas of relevance and application
Attendees broadly agreed that the leasing model works best for new-build fleets, where asset specifications, lifecycle costs and residual values can be defined from the outset. Mid-life fleet refurbishments were cited as examples where leasing-style approaches have delivered investment to improve the passenger experience.
While the model is not easily applied to core fixed rail infrastructure, depots were identified as a adjacent area where investment has been delivered with an option to extend this in the future Such stabling facilities have clear asset boundaries and a direct engineering relationship with rolling stock, making them more amenable to leasing or availability-based approaches.
More broadly, participants emphasised that the model’s emphasis on long-term contracts, clear asset definition and whole-life cost optimisation offers valuable lessons for other private investment models, even where direct replication is not feasible.
Barriers to wider transferability
Participants were clear that fundamental barriers prevent the rolling stock leasing model from being applied wholesale to infrastructure. A key issue is asset mobility: rolling stock can be redeployed across routes, supporting residual value and investor confidence, whereas fixed infrastructure cannot.
Political and policy risk was also seen as significantly higher for infrastructure assets, which are more exposed to changes in funding priorities, service specifications and government policy. Accounting and classification issues, including public-sector balance-sheet treatment, further constrain the use of leasing-style approaches for infrastructure.
Overall assessment
Discussions concluded that rolling stock leasing remains a robust and effective investment model for movable rail assets, but its direct applicability to infrastructure is more limited. Its key value lies in what it delivers: off-balance sheet treatment, access to capital, disciplined risk allocation, long-term contractual certainty and whole-life asset management expertise. These lessons remain highly relevant as the rail sector explores new approaches to funding and financing infrastructure.