The Public-Private Partnership Law Review: United Kingdom

Overview

i Early history

The UK was one of the pioneers of public-private partnerships (PPPs) in the early 1990s, although the private financing of infrastructure had occurred before this. The Conservative governments in the 1980s and early 1990s had embarked on an extensive privatisation programme of publicly owned utilities, including telecoms, gas, electricity, water and waste, airports and railways. In addition, there were a small number of free-standing transport infrastructure concessions2 where the concessionaire relied on end-user revenue for its return, rather than payments from the public sector.

The private finance initiative (PFI) – until recently the UK's predominant PPP model – was launched in 1992. PFIs are design-build-finance-operate projects structured as a purchase by the public sector of ongoing services, rather than capital assets, with these services defined as outputs.3 Service payments are principally met from public funds rather than end-user charges.

PFI got off to a slow start. Less than £1 billion of capital investment had been agreed with private companies by the end of 19954 but, following an initial reappraisal, the Blair government elected in 1997 gave increasing impetus to the PFI model, including the creation of a government taskforce to drive delivery of projects and encourage standardisation. PFI soon established itself as the main delivery method for public infrastructure within both central and local government. In the decade between 1998 and 2008 there was only one year in which fewer than 50 projects reached financial close.5

The term PPP is used in the UK to describe a variety of different forms of public-private sector cooperation. This chapter focuses chiefly on the PFI model and its successors, given their widespread use and influence on other models used in the UK.

ii Recent history

After the global financial crisis in 2008, the value and volume of PFI projects closing in the UK fell to their lowest levels in a decade and, despite a partial rebound in 2009, the use of the model continued to decline.6

In 2012, the government launched a revised PFI model called PF2, which closely resembled the PFI model but involved a number of changes designed to increase transparency, promote efficiency, ensure value for money and encourage finance from alternative sources of institutional capital (such as infrastructure and pension funds).

The key changes included:

  1. the public sector taking a minority equity interest in suitable projects, investing alongside the private sector (typically, this has been a 10 per cent interest);
  2. the introduction of funding competitions for part of the private sector equity interest; and
  3. greater transparency, including in relation to private sector equity returns.

The use of PFI/PF2 has been heavily affected by changing political sentiments over the years. Since the financial crisis, business and political opinion of PFI has been increasingly negative, with many questioning whether PFIs deliver value for money. The insolvency in 2018 of a key PFI contractor, Carillion plc, and the financial difficulties faced around the same time by Interserve, another major UK PFI contractor, further hardened public sentiment against PFI. This also helped fuel a move by major contractors away from large fixed-price construction contracts, which underpin PFI projects.

In the 2018 Budget, the then Chancellor of the Exchequer announced that PFI/PF2 would no longer be used to deliver new infrastructure. Subsequently, the government launched a consultation, the Infrastructure Finance Review, which sought views on alternative private finance models. The consultation closed in June 2019, and a summary of the responses was reported in November 20207, alongside the government's National Infrastructure Strategy.8 The government's position remains unaltered following the consultation: it will not reintroduce PFI, PF2 or similar models of private finance to procure infrastructure where costs ultimately fall on the taxpayer. However, it has stated that it will continue to consider new models, and will also consider how existing models can be applied in new areas. The future of PPPs in the UK is considered in Section VIII.

iii Regional variations

The devolved administrations in Wales, Scotland and Northern Ireland are not bound to follow UK government policy on PFI and have the capability to use alternative models (as does Transport for London). The Scottish government has previously used the non-profit distributing (NPD) model, under which there is no dividend-bearing equity, and returns for private sector participants are capped. However, the extent of control and profit retained by the public sector under the NPD model has meant that these projects have been reclassified as 'on balance sheet' for the public sector, which reduces the attractiveness of procurements using the model. The Welsh government is currently using a mutual investment model (MIM), with the first project delivered under the MIM reaching financial close during 2020. The model has a number of similarities to PF2 and is described in further detail in Section II.iii.

The year in review

i Covid-19

In April 2020, the Infrastructure and Projects Authority (IPA) issued guidance supporting the continued provision of vital services under PFI projects during the covid-19 pandemic.9 The IPA announced that PFI contractors should consider themselves part of the public sector response to the emergency and use their best efforts to continue providing vital services, while authorities should cooperate with PFI contractors to ensure continued delivery of public services.

The IPA made clear that the government did not consider the pandemic an event of force majeure and that authorities should work closely with PFI contractors to maintain public services (including maintaining payment of unitary charges to ensure contractors are able to pay their workforce and suppliers).

We are not aware of any major disputes of PFI contracts relating to covid-19 and understand that, in most cases, both authorities and contractors have followed the IPA guidance (including payment of unitary charges). However, as the pandemic continues into its second year, it remains to be seen whether this spirit of working together to support vital service provision will hold firm as restrictions continue to disrupt supply chains and change the way in which the vital services are used.

ii Brexit

On 24 December 2020, after almost four years of negotiations, the UK and the EU announced that they had agreed the post-Brexit EU–UK trade and cooperation agreement (TCA).10 The announcement of the TCA meant both parties had avoided a no-deal Brexit, which would have seen the UK leave the bloc without any formal future trading arrangements in place. Shortly after, on 1 January 2021, the transition period that had governed the relationship between the parties since 31 January 2020 ended.

The terms of the TCA span over 1,200 pages and provide for zero-tariff, zero-quota trade in goods between the EU and the UK. While the EU sought to agree strict level playing field measures with the UK throughout the negotiation (closely aligning UK legislation and regulation with that of the EU), the final TCA does not oblige the UK to align itself with EU law. The provisions preventing the EU or UK from deregulating industries or granting unfair, trade-distorting subsidies are stricter in the TCA than in many of the EU's other trade agreements, however the UK is free to diverge from the EU rules if it so chooses. To mitigate this, the TCA contains redress procedures (including the possibility to suspend market access commitments) that can be triggered by either side should it feel that the other side has implemented measures leading to unfair competition. In addition, the TCA allows the UK to create its own state aid system.

In terms of longevity, the TCA will be reviewed every five years and can be terminated by either side with 12 months' notice. Further, breach of any 'essential elements' of the agreement (such as climate change and respect for democratic values and fundamental rights) may trigger suspension or termination of all or part of the agreement.

iii MIM

The A465 'Heads of the Valleys' Road project is the first public-private partnership to be procured under the Welsh government's MIM. Financial close on the project was achieved in October 2020, just over four months after the announcement of the preferred bidder (a consortium comprising Meridiam and FCC, who together hold the majority stake in the project).

The project was notable for reasons other than being the first MIM project to reach financial close. It is one of a handful of greenfield PPP project financings anywhere in Europe at present and involved multiple debt tranches being provided by a combination of commercial banks and institutional lenders.

The swift progress from preferred bidder announcement to financial close demonstrates the market's ability to efficiently close a large-scale project financing remotely, despite the absence of face-to-face meetings due to covid-19 restrictions. This suggests that other similar, large projects, such as the Welsh government's 21st Century Schools programme, will be able to progress over the coming year in spite of the pandemic.

iv Cost-saving measures

Throughout 2020, authorities continued to seek cost savings on existing PFI/PF2 contracts. This often includes more rigid application of contractual terms and increased monitoring and enforcement. Examples of key areas targeted for savings include de-scoping, price variations, change in law and gain-share (e.g., on energy costs). This trend has also seen the growth of cost-saving consultancies seeking to find savings on behalf of public sector bodies involved in existing PFI/PF2 contracts.

There has also been a continuation in the de-scoping of 'soft services' in PFI/PF2 contracts such as cleaning, catering, waste management, security and IT services. The government's position has long been that the inclusion of soft services within the PFI/PF2 contractor's scope does not provide value for money, and often these services can be provided by the authority's in-house capability at a lower cost.

Separately, there are examples of authorities seeking to engage and incentivise both PFI/PF2 contractors as well as other suppliers and sub-contractors to make cost savings that can be passed on to the public sector. This is consistent with the general trend of austerity and cost-cutting across the public sector over recent years.

v Restructurings and distress

As with many sectors, government support packages such as the furlough scheme and the Coronavirus Business Interruption Loan Scheme have been available to contractors in order to address the short-term financial shock of the pandemic. By and large, contractors and sub-contractors appear to have managed to continue service delivery on projects and have not faced financial difficulties. In the case of PFI/PF2 projects, financial difficulties often follow from adverse adjudications or the punitive application of deduction regimes, and in this regard the IPA guidance (discussed above) will likely have mitigated the immediate impact of the pandemic without needing to start complex restructurings or falling back on formal insolvency proceedings. However, as government support packages start to be withdrawn or reduced, and spending by the government and authorities comes under even greater scrutiny as funds are reallocated to repayment of those support packages, we can expect an increased need for restructuring.

With decades still to run on contracts, authorities will be carefully considering how best to engage with lenders and equity investors to restructure projects and ensure their financial stability for the long term. This may incentivise authorities to accelerate their consideration of alternative models.

June 2020 saw the introduction of the Corporate Insolvency and Governance Act 2020, with new insolvency and rescue procedures. Many of these new procedures have not yet been tested fully in the market at all, let alone in a PPP context. Part of the reason for that are the broad exclusions that limit the impact of certain new provisions on PPP and PFI project companies and their funders. For example, in relation to contracts forming part of a PPP or PFI project, companies are not eligible for the new moratorium procedure or the new ipso facto provisions. The latter prevent termination or exercise of other rights set out in contracts for supply of goods and services where the trigger is the customer's entry into insolvency proceedings, which, in other contexts, has given rise to questions around termination and the operation of lenders' acceleration or step-in rights.

vi Role of private finance

In November 2020, the government published the National Infrastructure Strategy11 (NIS), setting out the government's long-term plans to 'transform UK infrastructure in order to level up the country, strengthen the Union and achieve net zero emissions by 2050'. The NIS followed the government's 10 point plan for the green industrial revolution that forms part of the government's blueprint for the UK to meet net zero carbon emissions by 2050. Pipeline spending figures are estimated at £600 billion over the next five years, with long term budgetary commitments made in relation to major infrastructure projects including HS2, high speed broadband and new roads.

The NIS makes clear that the government has no plans to reintroduce PFI/PF2 but will instead seek to develop new revenue support models alongside existing models such as contracts-for-difference (CfD) and the regulatory asset base (RAB) model to support private investment in infrastructure (see Section VIII for further details).

As part of the levelling-up strategy in the NIS, the government intends to prioritise investment in regions that have received less support in the past, including progressing the Midlands Rail Hub and Northern Powerhouse Rail schemes. At the time of writing, it would appear that these projects will be financed by the public sector.

vii UK infrastructure bank

One of the flagship policies in the NIS is the establishment of a new UK infrastructure bank (UKIB). The government hopes the UKIB will catalyse economic growth, bring geographic balance to UK infrastructure investment and aid the country's drive towards net zero carbon emissions.

The UKIB will be based in the North of England and is intended to be operational from spring 2021. Further details of the UKIB's operations, mandate and scope are expected to be set out by the Chancellor in the 2021 Budget and legislation to establish the bank is anticipated to follow shortly thereafter. The announcements made to date by the government suggest that the UKIB will be able to provide guarantees as well as debt, equity and hybrid investments and will also lend to, and advise, local authorities developing projects.

The government did not maintain access to the European Investment Bank (EIB) as part of the Brexit arrangements. While the UKIB is not intended to replace the EIB, it seems likely that it will, in part at least, replace some of the activities of the EIB (which has lent around €120 billion to UK projects since 1973). The UKIB will almost certainly be unable to surpass the sovereign credit rating of the UK and, as such, will not be able to match the EIB's credit rating (which is currently rated AAA by Fitch, compared to the UK's Fitch credit rating of AA-). This will mean that the UKIB is unlikely to pass on the benefit of low-cost borrowing to the same extent as the EIB, which is widely seen as one of the most tangible benefits offered by the EIB to projects in mature sectors.

The government has emphasised its intention for the UKIB to invest alongside, rather than in place of, private finance providers to deliver infrastructure projects. It seems likely, therefore, that the new bank will focus its efforts on enabling viable and bankable projects to access the financing markets – for example, supporting pilot projects in new sectors and co-lending to bridge funding gaps in sectors that have a limited track record and so cannot yet access sufficient lending from other sources.

viii National Security and Investment Bill

In November 2020, the government introduced the National Security and Investment Bill (Bill) to Parliament, which sets out significant legislative reform that will overhaul the review of transactions and investments on national security grounds in the UK. The new regime confers on the government a call-in power over a wide range of transactions where it is judged that there may be a risk to national security, and imposes mandatory notification obligations on parties involved in transactions in 17 specified sectors (including defence, energy and transport, among others). The Bill is expected to become law in spring 2021, with the regime coming into force around that time, although the government can exercise the call-in power in relation to transactions that completed on or after 12 November 2020.

ix Secondary market

There continues to be a strong market for the sale and purchase of developed UK infrastructure assets, including PPP assets. The value of PPP assets on the secondary market in relation to most sub-sectors (transport being an exception) appears to be unaffected by the pandemic and current economic situation, particularly those with availability-based revenue streams.

General framework

i Types of public-private partnership

The predominant form of PPP in the UK has been the PFI/PF2 project, with more than 700 in operation with a total capital value of £57 billion.12 As discussed above, the PFI/PF2 model will not be used for new infrastructure developments. However, there are other private finance models that have been used in the UK to deliver infrastructure.

PFI/PF2 and similar models

PFI/PF2 is a project-financed structure where the public sector procurer awards a contract through competitive tender for the design, build, financing and operation of certain public infrastructure. The contractor is a special purpose vehicle (SPV) formed by the successful bidder (or more commonly a consortium of bidders) for the purpose of the project. The construction and subsequent service provision are subcontracted by the SPV on the basis of a full flow-down of the risks under the PFI/PF2 contract to its subcontractors (who are often related entities of the bidders).

The Welsh MIM13 is similar to PFI/PF2 in terms of structure and risk allocation and, as with PF2 projects, makes provision for the public sector to take an ownership stake by investing alongside the private sector investors. A defining feature of the MIM is the requirement that the project delivers community benefits, such as providing training and apprenticeships and meeting local supply chain targets.

Concessions and user-pay models

Concession-based and other user-pay models typically use project-financed structures similar to PF2 projects but, rather than the contractor's revenue coming from payments made by the procuring authority, revenue comes from user charges. This structure is relatively rare in UK public infrastructure, but has been used for projects such as tolled roads and river crossings.14 Following the retirement of the PFI/PF2 model, concession-based and other user-pay models may be used more widely for infrastructure projects.

Strategic infrastructure partnerships

Strategic infrastructure partnerships involve a public sector body appointing a contractor (or contractors) to deliver a programme of projects, bundling together several projects that would otherwise be too small on their own to justify a project-financed structure. They may also be relevant where there are several phases of works in a project.15

Delivery partner (integrator)

The integrator model contemplates a contractor being appointed to manage the delivery of a project on behalf of the public sector through pre-procurement, procurement, construction and into operation. The delivery partner integrates the underlying procurements so that they deliver an overall asset or service to the procuring body. The delivery partner generally assumes a client-side role rather than delivering the underlying assets or services itself.16

RAB structures

The RAB model is associated with the ongoing private ownership and investment in network and other utility businesses, and has been widely used in the water, rail, power network and airport sectors, among others. Under this model, the relevant activity is made licensable and the licence permits the licensee to recover an agreed return on expenditure efficiently employed in developing and operating the project assets, subject to independent regulation.

While typically the RAB model has been used for operating businesses with an established asset base, the £4.2 billion Thames Tideway Tunnel 'super sewer' project demonstrated that the model is capable of being used to deliver greenfield infrastructure projects. The model is expected to have potential future application in delivering UK infrastructure,17 including new nuclear power generation,18 and aspects of the carbon capture, usage and storage (CCUS) value chain19 (see Section VIII for further information).

Direct procurement

Direct procurement allows water or energy companies to competitively tender for a third-party provider to design, build, finance, operate and maintain infrastructure projects that would otherwise be delivered and financed by the water or energy company itself. The model is designed to increase contestability within the sector and has been promoted as a way of increasing innovation and whole life costs savings as well as potentially reducing financing costs. Ofwat's proposed direct procurement for customers model is an example of the use of direct procurement in the regulated water sector. In the energy sector, Ofgem uses direct procurement for offshore transmission operators and has proposed that a similar scheme be introduced for onshore networks.20

CfDs

The CfD model is the government's main mechanism for supporting low-carbon electricity generation. The model works by paying the developer of a renewable project the difference between the 'strike price' (a price determined by competitive auction, reflecting investment costs) and a market reference price (a measure of average wholesale electricity prices in the British electricity market) for each unit of low-carbon electricity produced. If the prevailing market reference price is below the strike price, a 'top up' is paid by the company administering the contract on behalf of the government (and funded by end users of electricity). If the strike price is below the prevailing market reference price, the investor returns the difference. Holding a CfD provides certainty and stability to generators by reducing their exposure to movements in wholesale prices. A modified form of CfD is being considered to support the development of electricity generation projects utilising CCUS – see Section VIII.

Joint ventures

Joint ventures can either be:

  1. corporate, where a new corporate vehicle is established that is jointly owned by public and private sector entities; or
  2. contractual, where there is no separate entity and the public and private sector entities cooperate under the terms of a commercial contract.

The joint venture structure is usually used to progress commercial activities formerly carried out in the public sector for mutual benefit, or to realise the commercial development potential of publicly owned real estate, both of which are sometimes done with a view to a subsequent sale. A subset of these structures are mutual joint ventures, where the employees also own part of the joint-venture company. Joint ventures tend to be largely bespoke.

Government-owned, contractor-operated companies

This involves placing a commercial activity in a new corporate entity, transferring it temporarily to an appointed services contractor for the duration of the services and then returning it to the public sector. The government may hold a special share to ensure ultimate control of a strategic asset, but it will not have an economic interest.21

Flexible or hybrid projects

These are specially designed one-off structures for particularly large or complex projects where a procuring body requires a tailored approach; for example, where a long-term PPP relationship is desired but it is not possible to define the service requirement or pricing for the full period. They can borrow elements from several of the above structures.

ii The authorities

The following public bodies play a principal role in the PPP market in the United Kingdom:

  1. HM Treasury, which sets and oversees fiscal and general policy, and approves project business cases;
  2. the Cabinet Office, which oversees the standards and efficiency of government functions and procurement, and approves individual procurement routes and structures;
  3. the Infrastructure and Projects Authority, which reports to HM Treasury and the Cabinet Office, and supports the successful delivery of infrastructure and major projects. The IPA publishes national infrastructure delivery plans to cover infrastructure policy over a five-year period;
  4. the National Infrastructure Commission, which assesses and provides expert advice to the government on the long-term infrastructure needs and priorities of the country;
  5. procuring bodies (e.g., central government departments and local authorities), which structure and procure projects, enter into and manage contracts and pay for the services. These include departments and executive agencies of central government, local authorities and other public bodies;
  6. independent regulators, including those that regulate certain areas of activity (including environment, health and safety and data protection) and particular sectors (such as gas and electricity, water, rail and communications);
  7. UK Government Investments, a company wholly owned by HM Treasury that coordinates government shareholding of publicly owned companies, advises the government on corporate finance and oversees the UK's corporate assets;
  8. planning authorities, which decide whether to grant development consent for a project (the relevant planning authority will depend on the size and location of the project); and
  9. the Comptroller and the National Audit Office, which scrutinise government spending.
iii General requirements for PPP contracts

Unlike in many other jurisdictions, there is no specific PPP law in the UK. PPP projects are for the most part promoted under the general legislative and common law powers of government and public bodies. However, in certain cases, primary legislation has been passed to enable PPP projects to be financeable.22 Central government departments may act under the Crown's common law powers, which broadly confer unfettered legal power except where expressly or impliedly limited or restricted by legislation. Local government and other public bodies have powers conferred by legislation, which have generally proved adequate to promote PPPs.

The general UK legal framework, including contract, company, competition, employment and tax law, applies to PPPs as to any other projects.

The choice of which PPP model to use on each project is for the procuring body to decide, and there is no standard approach or correct structure when procuring a project. The Cabinet Office and HM Treasury will oversee any decision on the structure of the project and ultimately (and most importantly) its source of funding.23

The approach to PFI/PF2 has largely been standardised since HM Treasury first issued its Standardisation of PFI Contracts (SOPC) guidance in 1999, which set out recommended and required provisions that should feature in the relevant contract. SOPC guidance has been updated on a number of occasions, with the latest version, Standardisation of PF2 Contracts, being issued in 2012. A number of procuring authorities also produced their own standard forms during the period when PFI/PF2 contracting was most active. The Welsh MIM has followed a similar approach with the use of standardised contractual documentation.

Other forms of PPP contract may be more bespoke, although it is common for procuring authorities to adapt drafting and provisions set out in the most recent SOPC guidance.

All PPP projects are subject to various government approval processes that evolve over time and differ depending on which public body is procuring the project. By way of example, PFI/PF2 projects have to be approved before being procured with a typical approval framework being:

  1. the Cabinet Office approves the procurement route. The IPA operates a staged assurance process that the project must go through when proceeding to procurement; and
  2. HM Treasury approves the strategic outline case, the outline business case and then the final business case. The strategic outline case will be approved at the beginning of the project, the outline business case at the pre-market stage and the final business case before final negotiations begin. HM Treasury approvals take account of the IPA reviews.

Each procuring body must follow its own relevant approval process. Local government bodies and other non-departmental public bodies usually require sign-off from their sponsoring department.

All of these approvals are obtained by the procuring body and not the contractor. Once it has successfully bid for the project, the contractor need only obtain the licences and consents that would be required by any business undertaking the relevant activity. The contractor is not required to obtain any PPP-specific consents.

Bidding and award procedure

i Procurement regulations

The procurement of works, goods and services contracts by public bodies in the UK is currently governed by a series of regulations that originally implemented various EU directives. These regulations continue to apply with certain necessary practical adjustments to address the UK's departure from the EU, such as the removal of the requirement to advertise contracts in the Official Journal of the European Union in favour of a new UK e-notification service.

Currently, the main UK procurement measures are contained in the Public Contracts Regulations 2015 (PCR), which apply to the procurement of works, services or supply contracts that have a value in excess of the published thresholds for that year and are not otherwise excluded. The PCR require publication of the opportunity on the UK e-notification service and compliance with detailed rules when carrying out the competition. This regime applies to the majority of PPPs.24

Besides the PCR, there are three specialised sets of regulations that govern procurement of certain types of contracts excluded from the PCR:

  1. the Concession Contracts Regulations 2016, which apply when public bodies procure concession contracts, these being contracts where the contractor earns remuneration from third parties by exploiting the relevant asset or concession (e.g., toll roads);
  2. the Utilities Contracts Regulations 2016, which apply to procurement by utilities across a range of activities including energy, water, transport, ports, airports and postal services; and
  3. the Defence and Security Public Contracts Regulations 2011, which apply to the procurement of defence and security contracts the sensitive nature of which requires a higher degree of confidentiality and data security.

All of the regulations require the application of overriding principles of fair procurement, including the equal treatment of all bidders, transparency of the procurer's requirements and decision-making processes, and non-discrimination.

Where the full regime applies, there is a choice between five main procedures:

  1. the open procedure;
  2. the restricted procedure;
  3. the competitive dialogue procedure;
  4. the competitive procedure with negotiation (previously called the negotiated procedure); and
  5. the innovation partnership procedure.

In summary, the open and restricted procedures do not allow any form of negotiation or discussion between the authority and the bidder (although clarification of proposals is allowed) and these procedures are therefore unsuitable for procuring complex PPPs. Innovation partnerships are potentially appropriate where the authority is looking to the market to develop a new and innovative product or service, but this procedure is rarely used in practice.

The majority of PPPs and other large or complex contracts are awarded pursuant to either the competitive dialogue procedure or the competitive procedure with negotiation. These two procedures are similar: both involve the contracting authority inviting short-listed tenderers to participate in rounds of dialogue or negotiation before inviting final tenders and selecting the one that is most economically advantageous.

There has been a significant government policy focus on shortening procurement timescales. As part of this, the government promotes extensive pre-procurement market engagement, which is expressly permitted under the UK regulations. Conversely, public consultation is not usually a feature of the PPP process, although procuring authorities remain subject to freedom of information laws and concluded contracts are often published (usually in redacted form).

Before the 2019 general election, the government announced that it intended to move away from the EU-derived regime and replace the current UK procurement regulations with a new, simpler system based on the World Trade Organization's government procurement agreement (GPA). The GPA requires members to ensure that public authorities award public contracts using transparent, non-discriminatory tender procedures, but is less detailed and prescriptive than the EU procurement rules.

The government provided further detail on its planned overhaul of the UK regime in a green paper published in December 2020.25 The green paper sets out the government's proposals to replace the current four sets of procurement regulations with a single, uniform set of rules for all contract awards, supplemented by sector-specific sections where different rules are justified. The government also wants to consolidate the different award procedures into three variants:

  1. a competitive, flexible procedure with minimal detailed rules;
  2. an open procedure for simple, 'off-the-shelf' requirements; and
  3. a limited tendering procedure to be used where exceptional circumstances justify reduced competition.

The green paper also proposes numerous changes within these procedures.

Whether the competitive dialogue or negotiated procedure is used, the procurement process essentially follows the same steps:

ii Expressions of interest

All above-threshold contracts to which the legislation applies must be published on the UK e-notification service. The notice must describe the nature and estimated value of the contract and provide a link or address where further information can be obtained. The contracting authority often makes available an information memorandum detailing the opportunity and giving background information, together with anticipated timescales and selection criteria for the initial shortlisting of those who will be invited to tender. It may also include a draft contract, as well as the evaluation criteria that the authority will apply to tenders at subsequent stages of the procedure.

The information pack will also include a selection questionnaire to be completed by interested parties and returned to the authority, usually within a 30-day period. Most public bodies now use the government's standard form questionnaire, which asks a series of questions aimed at testing the financial capacity, technical ability and relevant experience of the bidding organisation or consortium, and determining whether the bidder falls within any of the grounds for mandatory or discretionary exclusion. Potential exclusion grounds include any history of criminal conviction, fraudulent activity, tax evasion or poor performance on previously awarded public sector contracts.

Respondents will be assessed based on their responses to the selection questionnaire. Those that meet the minimum requirements will be scored and ranked. The authority then selects a shortlist of usually between three and five respondents who will be invited to the dialogue or negotiations stage of the competition.

iii Dialogue, negotiations and final tenders

Bidders shortlisted as described in subsection ii will then be provided with a suite of documents referred to as the invitation to participate in competitive dialogue, or invitation to negotiate (depending on the chosen procedure). The documents will include details of the timetable and process for dialogue or negotiation, including:

  1. whether it will take place in successive stages and whether bidders may be rejected at each stage;
  2. the technical requirements and specification;
  3. the draft terms and conditions;
  4. the evaluation criteria to be applied to initial and final tenders; and
  5. the deadline by which initial tenders must be submitted.

Following the receipt of initial tenders, there is a period of dialogue or negotiation with each bidder. The authority may, in principle, discuss and negotiate all aspects of the tenders, but must also have regard to the core principle of equal treatment. This means that the authority may not agree to change its minimum requirements with one bidder and not others. The authority must also maintain the confidentiality of each bidder's technical solutions.

Following one or more rounds of dialogue or negotiation with bidders, the authority will eventually bring discussions to a close and invite final tenders from the remaining bidders, specifying a common deadline for their submission.

iv Evaluation and grant

Once the final tenders have been submitted, the authority will evaluate those tenders by applying its evaluation criteria. Those criteria and their weightings must have been disclosed at the outset in the procurement documents. Their overall objective is to identify the most economically advantageous tender, which essentially represents a balance of quality and price. The contract may only be awarded to the bidder that receives the highest-weighted score in accordance with the authority's evaluation methodology.

Following the decision to award the contract to a preferred bidder, final negotiations may be carried out with that bidder to finalise details of the contract, provided these do not materially modify essential aspects of its final tender. The authority must notify all of the unsuccessful bidders of its intention to enter into the contract with the preferred bidder and refrain from signing the contract for a standstill period at least 10 days from the date of the notification. The purpose of this notification and standstill requirement is to give unsuccessful bidders an opportunity to issue a claim in respect of any alleged breach of the procurement rules before the contract is signed with the preferred bidder.

v Subsequent amendments to PPP agreements

Where a PPP project falls within the scope of the regulations (whether the PCR or other regulations referred to above) and has been awarded pursuant to those rules, there are limitations on the extent to which the project agreements may subsequently be amended without triggering a requirement to hold a new competition.

The legislation specifies that any substantial modification has to be treated as giving rise to a new contract that must be put back out to tender, unless a specific exemption applies. A modification will be considered substantial if it renders the contract materially different in character; changes its economic balance or extends its scope considerably; or if the changed parameters would have attracted different bidders or led to a different successful bidder in the original competition. However, the regulations do allow for exemptions, inter alia, where the modifications were provided for in precise review clauses in the initial procurement documents or where the need for those changes has arisen from circumstances that a diligent authority could not have foreseen.

The parties to a PPP agreement falling within the scope of the procurement legislation should therefore consider carefully at the outset how to cater for the potential need to introduce amendments during the term of the PPP project.

The contract

This section focuses on the PFI/PF2 model and SOPC guidance. As the PFI/PF2 model will not be used for new infrastructure, this section is most relevant to existing projects. However, the SOPC principles and standard provisions continue to influence the terms of other PPP projects, particularly those using a project-financed structure.

i Payment

Once the project is operational and is performing to the required standard, the contractor is generally paid a unitary charge that covers the cost of the asset as well as service provision. While certain capital expenses may be covered by capital contributions, generally capital expenditure is financed by equity and debt finance and recovered through the unitary charge.

The payment mechanism sits alongside the performance regime and together they give financial effect to the agreed risk allocation by applying deductions to the unitary charge in the case of non-availability or a failure to meet service standards.

The unitary charge is typically indexed, and certain components of the charge may be subject to periodic benchmarking or market testing.

ii State guarantees

Projects procured by central government may carry a state credit rating. State guarantees of non-departmental public bodies are not common but have sometimes been provided in certain sectors and on the most complex projects.26 In 2012, the government introduced the UK guarantee scheme to support major projects, which will run until 2026 and is managed by the IPA (see Section VI.ii for further details).

It is unusual for the contractor to take significant demand or usage risk in PFI/PF2 projects, but for certain projects this may be appropriate. There are examples of the government providing usage guarantees to mitigate demand risk in such cases.

iii Asset and land ownership

The authority will usually own the land and lease or licence it to the contractor. However, where a project is equipment-based (rather than building-based), the contractor usually acquires the assets and the authority is given the right to use and, in certain cases, obtain ownership of the assets to fulfil its statutory duties.

Assets will generally be handed over to the authority at the end of the term of the contract, though certain exceptions exist.

iv Amendments and variation

As projects are long term, the contract usually will include a change mechanism to address changes to the requirements during the life of the project.

PFI/PF2 project contracts usually cover three main changes:

  1. change in use or functionality of the asset;
  2. change in capacity of the asset or service; and
  3. change in the specification and standards of the service.

If the contractor wishes to amend project and finance documents (including the contractor's supporting project contracts), the authority's consent will be required, although certain minor changes may only require notification to the authority once they have been made.

Changes are priced and agreed in accordance with the change mechanism, which will usually provide for an independent determination to resolve any disagreements between the parties.

v Risk allocation

The PFI/PF2 structure seeks to transfer the majority of the risk related to the construction and operation of the relevant asset to the contractor. This is achieved primarily through the payment mechanism and performance regime. The contractor typically will not earn revenue until the relevant asset has been completed27 and, once services have commenced, its revenue will be reduced if the services are not provided or are not provided to the required standard.

The authority retains or shares in the risks associated with certain supervening events, the occurrence of which entitle the contractor to relief from performance and, in certain cases, additional compensation. The extent of the available relief or compensation, or both, will depend on the nature of the event. There are three specific types of event:

  1. compensation events: events where the risk should lie with the authority, such as authority breaches of contract, and the contractor should receive relief from its obligations and compensation on a 'no better, no worse' basis;
  2. relief events: events outside the contractor's control but which the contractor is best placed to manage (or insure against) and which should provide the contractor relief from default termination (while still bearing the financial risk of delay or non-performance); and
  3. force majeure events: limited circumstances outside the contractor's control (and generally not capable of being insured) that are neither parties' fault. The affected obligations may be suspended, although termination rights may arise if the event cannot be addressed within a reasonable time frame.

vi Change in law

The authority will assume the risk of changes in law that expressly discriminate against the contractor or the project as well as changes of law that specifically refer to the provision of services of the type being provided by the contractor.

The authority may share in the cost of meeting capital expenditure arising as a result of other unforeseeable changes in law during the operational period (with the contractor expected to price in the impact of general changes in law during the construction period).

The contractor is also protected from changes to its operational costs arising as a result of a general change in law through indexation of the unitary charge and, where appropriate, benchmarking or market testing provisions.

vii Early termination and compensation

The authority will generally have the ability to terminate the contract for contractor default, including material or persistent breach and insolvency, subject to the contractor's right to rectify breaches that are capable of being rectified within a specific period. Authority termination rights are usually subject to the step-in rights of the project's senior lenders.

In most cases (but not always) the authority is required to compensate the contractor on termination for a contractor default. This compensation is generally calculated by reference to the market value of the asset, through a re-tender to a new contractor where there is a liquid market, or by assessment of an independent expert where there is not.

The contractor will be able to terminate the contract for authority default, which will generally be limited to non-payment, breaches that frustrate the services and non-permitted assignment (including breach of lock-in periods). The contractor will usually be fully compensated in these circumstances, including the repayment of project senior debt and equity returns.

The project contract may also include rights for the authority to voluntarily terminate the contract, and in this case the contractor will be fully compensated.

Continuing force majeure events that cannot be resolved within a reasonable time frame may lead to termination. The compensation will be on a no-fault basis and, while senior debt will be repaid, the contractor sponsor's equity will only be repaid at par value.

The contract will set out in detail the provisions for calculating the termination compensation. The termination compensation regime is always a key focus for a project's senior lenders and equity investors.

viii Refinancing

Standard form PFI/PF2 contracts include provisions for the sharing of refinancing gains. The authority typically has the right to approve any refinancing, and provisions are included in the contract to allow the authority to share in any qualifying refinancing gains achieved through refinancing (usually on a sliding scale).

Finance

PPP projects are typically financed by a mixture of debt provided by lenders on a limited recourse basis (i.e., the lenders' principal recourse is to the project's cash flows only and does not extend to other assets of the project or the project's equity investors, subject to any construction guarantees or letters of credit that may be given) and equity. PFI/PF2 projects have a high level of debt-to-equity, typically a ratio of around 90:10.

i Equity

PFIs were generally set up using a conventional holding company–project company structure. Historically, it was the construction contractors bidding for the projects that provided the upfront equity capital investments. However, third-party financial investors (such as infrastructure funds) regularly acquire equity in PFI projects once they have been completed, and on more recent projects have invested at an earlier stage as a result of market growth and contractors' capital constraints.

Equity is usually provided in the form of subscription monies and subordinated debt, the latter being structured either as the issue of unsecured loan notes or shareholder loans. The subordinated debt is generally regarded as equity for financial gearing ratio purposes.

One of the main differences between PFI and PF2 is government participation in the project equity. In PF2 projects the government, through an arm's-length HM Treasury unit, provided an element of the equity capital into the project vehicle (typically 10 per cent). The purpose of taking an equity stake was to strengthen the collaboration between the public and private sectors, and enable the public sector to benefit from increased financial transparency and decision-making capabilities on such projects. As described above, the Welsh MIM also provides for the Welsh government to take an equity stake (up to 20 per cent).

ii Debt

Commercial banks have tended to be the most common source of senior debt for PFI and PPP projects and they have been an important source of debt throughout the lifetime of the model in the UK. As commercial banks will tend to lend at a floating interest rate, borrowers also take out matching interest rate swaps to fix their interest rate exposure.

There has for a long time, however, been a view in the market that institutional money (for example, from pension funds and insurance companies) is a more natural fit for the long-term fixed rate debt that PFI and PPP projects require, and the market has frequently sought to find financing structures that would access the public bond market, through which much institutional money is invested or lent. However, certain characteristics of the public bond market impeded this, including in particular that:

  1. the normal bond approach that issues proceeds are received in a single lump sum up front (whereas a construction project only needs access to funds as construction progresses);
  2. bond investors are traditionally more passive than commercial banks (making them less suited to complex projects where lender engagement and waivers or consents are common); and
  3. better bond market liquidity and value is available for strong investment grade issuers (whereas PFI and PPP projects tended to be low or sub-investment grade, particularly during construction).

Prior to the 2008 financial crisis, this manifested itself in the rise of monoline-wrapped bond finance, in which monoline insurers or guarantors with strong (typically AAA) credit ratings took project credit risk for an appropriate fee and provided a financial guarantee or credit insurance policy to bondholders, enabling the bonds to be issued with the benefit of the monoline credit rating. The monolines were able to solve the challenges of the public bond market by acting as a credit provider who would take lender decisions, offering investment products for upfront bond proceeds until they were required to fund the project and providing access to the most liquid end of the bond market (at or approaching AAA). However, this model largely disappeared with the decline of monolines during the financial crisis, although Assured Guaranty continues to do business, offering an AA credit insurance product.

Since the 2008 financial crisis, banks have been increasingly reluctant to issue long-term loans because of stricter regulatory requirements and capital constraints, and as a result there has been continued focus on institutional lenders as a source of alternative sources of debt financing to fill the void. Various products have been proposed and developed to address the bond market challenges noted above, albeit with varying degrees of success. Bond finance products have also been developed for the financing of projects following the construction phase or the refinancing of completed projects on more favourable borrower terms.

However, the most important evolution has come in the past few years, with institutional lenders lending directly to PFI and PPP projects. While these structures are generally known as private placements (reflecting a model in which bonds are placed privately with a small number of investors or lenders), they can be structured in either loan or note or bond formats. Many institutional lenders now have large and well-skilled project finance teams, allowing them to participate in lending syndicates on equal terms with commercial banks; they also have the appetite for lending longer-term fixed rate debt at competitive interest rates. As a result, institutional private placements are now the most prevalent route for institutional lending and a common feature in PFI and PPP projects, with institutional lenders providing longer-term facilities at fixed interest rates and commercial banks providing shorter-term facilities, working capital and standby facilities.

An increased focus on ESG has also seen green loans and bonds and sustainable financing products develop. These are largely a way of identifying loans that support environmental and sustainable development projects, offering access to additional market liquidity for infrastructure projects that offer environmental or sustainability benefits, or both, such as renewable power generation and waste management projects as well as the Thames Tideway Tunnel project.

Another policy that was established to encourage alternative debt funding is the UK guarantee scheme (scheme), under which the government guarantees debt raised to fund infrastructure projects of national significance that have been unable to raise finance in the financial markets. In many respects the scheme resembles the monoline-wrapped bond structure from the financial crisis, in that the government offers a guarantee in return for a fee that enables the project to issue bonds with a UK government credit rating. A key characteristic of the scheme is that the government acts as a market investor, so that the fee that it charges must be market-based, and it is only able to offer the guarantee in line with normal lender credit assessment procedures. As a result, the scheme is only available to fund projects that are inherently bankable according to normal project finance criteria, but that have been unable to find funding in the financial markets because of market dysfunction (or other external factors). Ten projects covering different sectors and deal sizes have already benefited from the scheme since its inception, and the government announced in November 2016 that the scheme will continue until at least 2026. However, many commentators regard the scheme as unnecessary for the majority of well-structured at or near investment-grade infrastructure projects.

Recent decisions

A notable procurement law case in 2020 was Stagecoach East Midlands Trains Ltd & Others v. The Secretary of State for Transport28 involving the challenge by three train-operating companies (TOCs) of the Secretary of State for Transport's decision to disqualify them from the procurement processes for the East Midlands, South Eastern and West Coast rail franchises (a type of concession agreement). As part of the procurement process, the Secretary of State had sought to allocate greater pensions liabilities to the successful bidder and had provided in the invitation to tender that amendments were not permitted to the franchise documents to depart from this. Nonetheless, the claimant TOCs submitted bids that sought to transfer risk back to the Secretary of State and, as a result, they were disqualified for having submitted non-compliant bids. The TOCs challenged this decision as a breach of EU law and procurement regulations, but the court dismissed the claims.

The court held that a contracting authority has a wide margin of discretion regarding the contractual allocation of risk and there is no principle of EU or UK law that limits the size of risk that can be allocated to one contracting party in a public procurement. It is therefore for bidders to decide, based on the terms of the invitation to tender, whether to submit a bid. The court further held that the invitation to tender in this case was sufficiently clear that a reasonably well-informed and normally diligent bidder would have appreciated the consequences of proposing amendments to the franchise documents, and could have predicted disqualification. Therefore, the disqualification was lawful and there had been no breach of proportionality, transparency or equal treatment under EU law.

A further procurement case, and a rare modern example of litigation involving a PPP project, Ryhurst Ltd v. Whittington Health NHS Trust 29 involved a claim against the defendant NHS trust for abandoning a 10-year strategic estates partnership that it had previously awarded to the claimant, Ryhurst. The trust cited several reasons including its improved financial position, strengthened relations with other partners and the risk of insufficient stakeholder support, but the claimant, whose group company had supplied and installed cladding at Grenfell Tower, claimed that the true reason for the abandonment was pressure exerted on the trust by campaign groups, MPs and others due to the Grenfell Tower connection. Ryhurst claimed that the abandonment was thus a breach by the trust of duties under the PCR. The court dismissed the claims, holding that the trust had genuine and rational reasons for deciding to abandon the procurement and had not breached EU principles of transparency, equal treatment, proportionality and avoiding manifest error. The court held that the trust had been entitled to take the lack of stakeholder support for the project into account, and that there were a range of perfectly proper and rational reasons for this lack of support – including, interestingly, objection to the strategic estates partnership's nature as a form of PPP.

Hailed as a landmark ruling, the UK Supreme Court handed down judgment in The Financial Conduct Authority v. Arch & Others,30 which addressed questions of interpretation of business interruption insurance policies arising from the covid-19 pandemic. The case had been brought by the Financial Conduct Authority (FCA) on behalf of policyholders to test various sample wordings and the Supreme Court unanimously dismissed the insurers' appeals and substantially allowed the FCA's appeals. The following points may be of interest to PPP projects affected by the pandemic or measures taken in response to it:

  1. In relation to disease clauses providing cover for occurrence of a disease within a certain radius of the business, the Supreme Court held that this is triggered by any individual occurrence of illness in a person within that radius, with no regard to cases of illness outside the area. However, such clauses do not require the business interruption to result only from cases within the radius and they should accommodate the possibility of a disease affecting a wide area.
  2. On prevention of access clauses providing cover where public authority intervention prevents access to the insured premises, the Supreme Court took a wider approach to what constituted authority intervention, with certain mandatory instructions sufficing without underlying statute or regulation. In addition, losing access was held to include loss of access to part of a business (i.e., a restaurant only being allowed to open for takeaway).
  3. The Supreme Court rejected the insurers' argument on causation: that loss would not be covered if not sustained but for the particular peril (localised disease, public authority action) but instead because of the wider effects of the pandemic. It held that the 'but for' test was not determinative here and that the causal connection had to take account of the nature of the cover and may be satisfied where the insured peril, in combination with many other similar uninsured events, brings about loss with a sufficient degree of inevitability. Hence, a disease clause would cover loss occurring from localised occurrence of the disease in combination with the wider pandemic, even if the localised occurrence alone would not have caused the loss.

The Supreme Court's detailed analysis will have significant impact for business interruption insurance policyholders, and may have wider influence on the interpretation of other contracts affected by the pandemic.

Outlook

The UK was one of the pioneers of PPPs and the model has been replicated in numerous other jurisdictions. While the PFI/PF2 model is currently out of favour in the UK, the government has stated that it will continue to seek to consider new revenue support models as well as extend the use of existing models.

In December 2020, the government reported on the results of its consultation on the use of the RAB model for new nuclear power stations and other energy sources. The model described in the consultation is similar to the model that was used to finance the Thames Tideway Tunnel project and the consultation response was generally supportive of the use of such model.31 Earlier in the year, the government published its response to its consultation on potential business models for CCUS developments.32 The response anticipates the use of the RAB model for the delivery of the transportation and storage components of CCUS.

Alongside the possible wider use of the RAB model, the government has broadened the use of the CfD scheme for power generation. In March 2020, the government announced that onshore wind and solar photovoltaic would be included in the next round of CfD auctions and a modified form of CfD is being considered to support the development of electricity generation projects utilising CCUS. This form of CfD would have a dynamic strike price designed to incentivise the project to dispatch ahead of unabated generation, but behind renewables.

The RAB model and CfDs are not suitable for delivering all infrastructure developments. In particular, both models are funded by end-user revenue, making the models unsuitable for most social infrastructure and its use challenging where there are already very high end-user costs (passenger rail transport, for example).

There remains a question as to what, if any, model will take the place of PFI/PF2 or whether this gap will simply be met by public sector finance. What is clear is that the private sector will continue to play an important role in the financing of new and existing public infrastructure in the UK, even if that is not through a traditional PPP-like structure.

Footnotes

1 Tom Marshall and Helen Beatty are partners and Sam Cundall is an associate at Herbert Smith Freehills.

2 For example, the Channel Tunnel, which opened in 1994, and the QE2 Bridge at Dartford, which opened in 1991.

3 The public sector setting what outputs need to be achieved and the private sector deciding how it will achieve them.

4 Private Finance Projects, National Audit Office (October 2009), https://www.nao.org.uk/wp-content/uploads/2009/11/HL_Private_Finance_Projects.pdf (last accessed 26 January 2021).

5 ibid.

6 Private Finance Initiative and Private Finance 2 projects: 2018 summary data, HM Treasury (May 2019), https://www.gov.uk/government/publications/private-finance-initiative-and-private-finance-2-projects-2018-summary-data (last accessed 26 January 2021).

7 Infrastructure Finance Review, HM Treasury and IPA (25 November 2020), https://www.gov.uk/government/consultations/infrastructure-finance-review (last accessed 26 January 2021).

8 National Infrastructure Strategy, HM Treasury (25 November 2020), https://www.gov.uk/government/publications/national-infrastructure-strategy (last accessed 26 January 2021).

9 Supporting vital service provision in PFI/PF2 contracts during the covid-19 emergency, IPA and HM Treasury (2 April 2020), https://www.gov.uk/government/publications/supporting-vital-service-provision-in-pfipf2-contracts-during-the-covid-19-emergency (last accessed 19 January 2021).

10 The EU–UK trade and cooperation agreement (31 December 2020), https://ec.europa.eu/info/relations-united-kingdom/eu-uk-trade-and-cooperation-agreement_en (last accessed 26 January 2021).

11 National Infrastructure Strategy (see footnote 8).

12 Managing PFI assets and services as contracts end, Comptroller and Auditor General (5 June 2020), https://www.nao.org.uk/report/managing-pfi-assets-and-services-as-contracts-end/ (last accessed 20 December 2020).

13 Current examples of which include the dualling of the A465, the redevelopment of the Velindre Cancer Centre in Cardiff and additional investment in Band B of the 21st Century Schools Programme.

14 For example, the QE2 Bridge at Dartford and the Second Severn Crossing (before the expiry of its concession in 2018).

15 An example of such a partnership is that of the Cambridge University Hospitals NHS Foundation Trust and John Laing, who are collaborating on a series of medical facilities.

16 Prominent uses of the delivery partner model include the Olympic Delivery Authority appointing the CLM consortium in relation to the London 2012 Olympic Games and Transport for London using Crossrail Ltd for the construction of the Elizabeth Line.

17 National Infrastructure Strategy (see footnote 8).

18 RAB model for new nuclear projects: government response, Department for Business, Energy and Industrial Strategy (BEIS) (14 December 2020), https://www.gov.uk/government/consultations/regulated-asset-base-rab-model-for-nuclear (last accessed 26 January 2021).

19 Business models for carbon capture, usage and storage, BEIS (17 August 2020), https://www.gov.uk/government/consultations/carbon-capture-usage-and-storage-ccus-business-models#history (last accessed 26 January 2021).

20 Energy White Paper: Powering our net zero future, BEIS (14 December 2020), https://www.gov.uk/government/publications/energy-white-paper-powering-our-net-zero-future (last accessed 26 January 2021).

21 The Atomic Weapons Establishment (AWE), responsible for the design, manufacture and support of the UK's nuclear weapons, is a government-owned, contractor-operated arrangement in which the government holds a golden share. However, the Ministry of Defence has announced that AWE will become an arms-length public body from mid-2021 instead.

22 For example, the National Health Service Act 2006 permitted the government to guarantee the payment obligations of NHS trusts in certain circumstances.

23 Previously this has included PFI credits, a form of ringfenced funding that afforded additional spending power for PFI projects to be delivered by local authorities. However, PFI credits have been abolished and have not been used for a number of years.

24 The PCR also lay down a light touch regime, which is applicable to contracts for certain specified types of services including social, health and education services. This regime will rarely be relevant to PPPs.

25 Green Paper: Transforming public procurement, Cabinet Office (15 December 2020), https://www.gov.uk/government/consultations/green-paper-transforming-public-procurement (last accessed 26 January 2021).

26 See footnote 23.

27 There are examples of projects where a part of the charge is payable from financial close in circumstances where the contractor takes over existing infrastructure as well as constructing new infrastructure.

28 Stagecoach East Midlands Trains Ltd & Others v. The Secretary of State for Transport [2020] EWHC 1568 (TCC).

29 Ryhurst Ltd v. Whittington Health NHS Trust [2020] EWHC 448 (TCC).

30 The Financial Conduct Authority v. Arch & Others [2021] UKSC 1.

31 RAB model for new nuclear projects: government response (see footnote 18).

32 Business models for carbon capture, usage and storage (see footnote 19).

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