OPPPS Keynote Address

On 9th December 2024, Lord Hutton gave the keynote address at the inaugural Operational Partnerships Summit;

Good afternoon, everyone.

I’d like to begin with a story of a man who one day, over two hundred years ago, boiled a kettle. You probably know his name - since it’s etched on our industrial memory. And you may have already met him, on your way in today. Because outside this hotel, in the shadow of the Black Prince, stands the statue of James Watt. The man who revolutionised the steam engine. And it feels rather fitting that his journey towards doing so - and the legacy he eventually left - began with what we all know as that very British process, of making a cup of tea.

The story is short- and indeed likely apocryphal - but it goes like this: Young Watt noticed a little steam lift the lid of his kettle… and discovered it was powerful enough to move matter. And within this, he realised that energy was being wasted in the dissipation of heat in the current method of powering trains. Which sparked the question that would guide his life’s work: How can this subtle energy be captured, and made more efficient?

Now the reality, to which this particular story does not likely belong, was a little less dramatic. No, Watt didn’t invent the steam engine - that belongs to Thomas Newcomen. But what he did do was of perhaps greater significance to how we - everyone gathered today - should think about the world right now. Watt located the inefficiencies of an established design, and discovered how to dramatically improve them. Not by replacing. By renewing. And in adding a separate condenser, Watt transformed the engine from a cumbersome tool into a stallion workhorse of the Industrial Revolution.

Now this may feel a little obvious. But that ability - to see potential within problems… to seek to fix, rather than replace… is what makes Watt’s legacy so useful.

Which brings us to today. Because we should all think a little more like Watt, when thinking about our national infrastructure. We’re not here to invent steam engines.

But we should make the things we’ve already got better, and much more efficient. To take something we’ve already developed - and put it to work properly. And so we must reset our thinking.

Let me explain a little more what I mean by this. 

In the context of Public Private Partnerships, ‘resetting’ is not a rejection of what’s come before. It’s a careful, deliberate renewal that ensures PPPs become an even more powerful force for the future. PPPs have been central to our infrastructure strategy for over three decades. Together, public and private sectors have delivered hospitals, schools, roads, railways, and more. They’ve shown us what collaboration achieves: efficiency, innovation, projects delivered on time, and on budget. 

But the model faces significant challenges. 

Nearly 150 PFI contracts are approaching expiry, and this process - the handback - is far more complex than simply shifting assets back to public ownership. Over 500 are still currently in the middle of their contractual life, with expiries continuing until 2048 .And what are the issues we ourselves see in the steam? 

We are seeing the operational strain, and the relationships that once thrived on collaboration that have, in many cases, become adversarial.  We see the inevitable ageing of assets, and the many projects lacking the comprehensive data needed to assess their condition, compliance, and readiness for handback. Systems exist today that did not 15 -20 years ago and technology exists that places the evidence at our fingertips. And we see major future capacity risks, where the sheer scale of expiring contracts could overwhelm both public and private sectors, creating a bottleneck that will delay progress and undermine broader confidence in our model. 

Now these aren’t isolated issues. 

They represent a systemic challenge that threatens to overshadow the successful completion of these public infrastructure projects. We shouldn’t let this happen. They stem from inefficiencies in the implementation of the current model as designed, which is in need of dramatic improvement. So without action, we risk undermining PPP’s entire legacy, and blighting the potential role private capital could play in renewing our public realm. 

But what can we do, to move the kettle’s lid? And where, beyond the flaws, are the opportunities? 

Well, as with Watt’s diagnosis, the challenges facing PPPs are not cosmetic - they’re structural.  And these are flaws rather than failures requiring complete replacement.  So we must innovate, refine, and improve. 

Which is where the reset comes in. Now this term - ‘reset’ - was first coined in a PPP context by the IPA-commissioned White Fraiser Report, which set out a three step process, as follows:

First, a systematic review of asset/services; second, a rectification plan based on the findings; and third, a degree of relief from Deductions, to allow programmed rectification to take place.

Think of this as the modern-day equivalent of Watt’s separate condenser - a targeted improvement that addresses inefficiencies, and recommends how to better use the energy that we already have. The AIIP have been working over the last few months to develop this idea into an operational model that can address the challenges we are facing. The Reset Framework recommended by the AIIP aims to achieve just this, and expands on White Fraiser.

And it is built on five clear pillars: 

First, it must be targeted and proportionate. 

The reset must be focussed and evidence-based. Not every PFI project requires the same level of intervention. Many are already high-performing, with strong interfaces and collaborative relationships in place. For those, a light-touch approach is appropriate. But for others - those with operational or asset-based challenges - a more comprehensive reset may be required. An objective, evidence-based assessment of the need for a reset and its scope is essential, ensuring interventions are scaled to the specific requirements of each project. This targeted approach avoids unnecessary interventions while ensuring central issues are addressed properly.  Ultimately, proportionality conserves resources, focuses efforts where they’re needed most, and enables better outcomes across the portfolio. 

Second, the reset must be programmatic, not reactive. 

With over 663 projects in scope, a phased approach is essential to avoid overwhelming the market and ensuring resources are deployed effectively. This involves segmenting projects by their proximity to expiry, asset class, and the extent of intervention required.  For example, healthcare facility project nearing handback might require a different level of reset than a mid-life road project.  Central frameworks can help prioritise and phase interventions, ensuring the greatest impact while preserving market capacity. Consider the supply chain challenges highlighted in surveying the market: a programmatic approach allows SPV owners to coordinate Rectification Works Programmes efficiently, integrating them with planned maintenance to minimise disruption. Planning ahead also strengthens trust between stakeholders, creating a shared timeline for action and clarity on expectations.

Third, the reset should be equitable.

It must be fair, and beneficial to all parties. For the public sector, this means ensuring assets are handed back in good condition, ready to serve communities. For the private sector, it means having clear, consistent guidance and a fair environment for implementing improvementsA strong example is the role of relief mechanisms. If an SPV invests in surveys and funds any identified rectification works, proportional relief - such as temporary waivers or deductions - ensures fairness, full transparency in identifying, raising and resolving issues, and incentivises proactive engagement.This concept, endorsed by White Frasier, encourages collaboration while maintaining accountability. And good faith must underpin everything. Relationships must shift from adversarial to cooperative, with all parties actively addressing the issues identified in their respective domains. 

Fourth, we need scalability and consistency. 

Reset frameworks must be scalable and applied consistently across projects. Without this, stakeholders face inefficiencies, high costs and uncertainty. Centralised frameworks developed by the IPA and sponsoring departments are vital.These provide a standard approach for SPVs and contracting authorities, creating predictability while reducing the need for bespoke negotiations and legal drafting. For example, governance improvements like jointly appointing surveyors or implementing shared risk registers can streamline reset processes across the portfolio, ensuring alignment and efficiency. Scalability also ensures resets can be tailored to individual projects, whether minor adjustments or comprehensive overhauls. This balance between uniformity and flexibility strengthens confidence across the public and private sectors. 

Fifth, it must be sustained. 

A reset is not just a fix for today - it’s the essential foundation for tomorrow. The improvements generated must last well beyond the reset process itself, ensuring smooth handback and ongoing compliance. Frameworks linked to agreed-upon objective standards are instrumental here. By aligning reset outcomes with agreed standards, and using technology-based data solutions fit for the present day and beyond, we can ensure project data and records are accurate, accessible, and provide a foundation for seamless transitions in the future. Sustainability also reduces the need for extensive expiry surveys, replacing them with validation processes that confirm compliance. Beyond technical fixes, cultivating a collaborative culture ensures operational excellence and trust endure through the project lifecycle. 

And finally, a reset should not be viewed solely as a rescue mechanism for failing projects.

It is a proactive, preemptive opportunity to identify and address challenges, secure long-term benefits, and strengthen the PPP model. Whether it’s addressing operational strain, mid-contract, or ensuring assets are ready for handback, this is a tool for improvement at every stage. Even for distressed assets, a reset provides a structured approach to resolving issues, creating better outcomes for all involved. 

When we, at the AIIP, call for a reset, we are asking for renewal. Not just for our partnerships. But renewal for the public sector - to ensure assets are handed back in good condition, and ready to serve our communities.Renewal for the private sector - to restore confidence, and create a stable national environment for future investment. And for society - because a reset allows this model that has already delivered so much for Britain to play an important role in the future. The reset we recommend is not simply a response to the challenges we face.There’s a much bigger picture here. It’s about resetting our vision for what PPP can achieve, having fully embedded the knowledge and successes readily available from a 30 year history.

So allow me to return to James Watt, just one last time. 

Let’s remember: his work restarted nothing; instead it remedied flaws to an existing design. The flaws were turned into new opportunities. But it was, nevertheless, revolutionary. So this is our own Watt moment - for our wider national infrastructure.  If we take this opportunity to reset relationships we  can build on what’s already been established.  We will be able to address our own infrastructural inefficiencies, maintain what we’ve already achieved, and make something much greater.  This is the argument we are making to Government and  I am optimistic we can make progress. We cannot go on as we are without putting at risk vital parts of our national infrastructure. 

Thank you for listening.