The PPP procurement model ensured that tenders are offered at the individual project level
Local Improvement Finance Trust (LIFT)
Context
- In the late 1990s, the National Health Service (NHS) was struggling with its numerous rundown health facilities. New buildings were needed, particularly where old facilities were obsolete, often in the poorest areas of the country
- Other facilities needed repairs or rejuvenation, but insufficient funds were available within municipal, local or regional government coffers to finance the necessary investment
Problem
- While private investment was considered as a possible solution to provide the required financing, it was difficult to attract individual health facilities given their small size
- Investors perceived such investments as high risk, reducing the affordability of potential finance needed to rejuvenate or replace the health facilities
Innovation
- The Local Improvement Finance Trust (LIFT) was launched as a procurement vehicle for PPPs to rejuvenate and renovate health facilities
- The LIFT SPVs bundled multiple small projects for investment by private sources and public sector entities , typically in a 60:40% equity split
- LIFT partnerships finance, deliver, manage and maintain health facilities across defined areas of England3 and the buildings are leased back to the NHS
Stakeholders Involved
- The UK Department of Health (DoH)– introduced the LIFT initiative in 2000
- National Health Service (NHS) – primary recipient of health facility investment
- Clinical Commissioning Groups – clinically-led statutory NHS bodies responsible for the planning and commissioning of health care services for their local area that pay the rental fees to LIFT companies on behalf of the NHS
Results/Impact
- Since 2001, c. USD 2.8B of investment has been injected into 314 new healthcare facilities, covering 872k square meters of floor space for health services
- An estimated c. USD 1.68B has been injected into SMEs1 along LIFT companies' supply chains and c. 30k jobs across the developments
- Approx. USD 1.1B of the total investment has been spent in the top 10% most deprived areas, enabling the improvement of healthcare service delivery in underprivileged communities
- 60% of England's population is served by the health facilities created by the LIFT initiative
Key lessons learnt
- The bundling of small social infrastructure projects by a PPP procurement vehicle created sufficient scope and scale to attract private sector participation in social infrastructure development
- The portfolio approach facilitates a downward pressure on costs for the infrastructure projects as the structuring costs of contracts are shared evenly, and construction and lease costs are reduced due to efficiencies from scale
- The PPP procurement model ensured that tenders e.g. for construction, are offered at the individual project level, allowing local SMEs to win tenders, facilitating spillover effects at the community level, supporting economic growth
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