Executive Summary

Infrastructure is emerging as a central pillar of the UK’s local investing agenda, driven by the convergence of pension reform, devolution, industrial strategy and growing demand for resilient, low-carbon infrastructure. As discussed in The Good Economy’s recent Infrastructure Deep Dive Webinar, this creates a significant opportunity for institutional investors, particularly LGPS pools and other long-term asset owners, to deploy capital into assets that offer stable, inflation-linked returns while also supporting local growth, community resilience and net zero.

The discussion made clear, however, that policy ambition alone will not be enough. Unlocking investment at scale will depend on building a stronger pipeline of genuinely investable projects, supported by clear funding models, standardised structures, cross-sector collaboration and greater delivery capability across the public sector. With the right partnerships and project preparation, infrastructure can become a cornerstone of place-based local investing strategies, helping institutional portfolios deliver both long-term value and positive local impact.

Infrastructure Moving Back to the Centre of the UK Investment Conversation

The Good Economy’s (TGE) recent Infrastructure Deep Dive webinar, which brought together perspectives from across the investment ecosystem, focused on how institutional capital can drive local economic growth through infrastructure investments.

The webinar was the second in our series of sector deep dives following the publication of our landmark white paper last year – Scaling-Up Local Investing for Place-Based Impact – which provides a strategic framework and practical guidance for LGPS, institutional investors, and public authorities on turning the local investing agenda into a national reality. The discussion highlighted both the scale of the opportunity and the practical steps still needed to turn policy ambition into investable projects.

Why Infrastructure, and Why Now?

There is growing momentum behind infrastructure as a core component of place-based investment. Across the UK, there is a clear need to renew ageing assets, build enabling infrastructure for housing and regional development, strengthen resilience, and accelerate the transition to net zero.

At the same time, public funding alone will not be sufficient to meet this demand. That creates a significant role for long-term private capital, particularly from institutional investors whose investment horizons and liabilities are often well aligned with infrastructure’s characteristics – stable cash flows, inflation linkage, diversification benefits and long-duration returns.

For Local Government Pension Scheme (LGPS) investors in particular, this alignment is especially strong. As Nadeem Hussain, Head of Private Markets and Real Assets at LGPS Central noted during the webinar, infrastructure remains attractive not only because of its long-term, predictable cash flow profile, but because it offers differentiated risk-adjusted returns and the potential to generate visible benefits for local communities and scheme members.

A Policy Window is Opening

One of the strongest themes from the discussion was that several strands of policy are now moving in the same direction.

These include LGPS reform and the “Fit for the Future” agenda, local devolution and local growth plans, the government’s industrial strategy, the emerging infrastructure pipeline, and the National Wealth Fund’s strategic focus on accelerating place-based investment.

Taken together, this creates a more supportive environment for institutional investment into UK infrastructure than we have seen for some time.

Simon Povey, co-Head of Europe at the Office for Investment’s Capital Formation Group, described this as a moment where government is increasingly focused on the role of private investment in delivering public policy outcomes. The challenge now is to ensure that investors can see a stable, credible pipeline of opportunities and that government, regulators and local leaders understand what is required to make projects genuinely investable.

That distinction is important. As several panellists noted, a pipeline is not the same as a pipeline of investable projects. The latter requires projects to be sufficiently developed, structured and de-risked to attract institutional capital.

From Policy Ambition to Investable Opportunities

The webinar made clear that the next phase of market development will depend less on high-level policy statements and more on execution.

Shelley D’Souza, Director of Banking and Investments at the National Wealth Fund, explained their role as a catalytic investor, with capital available to co-invest and crowd in private sector funding. But she also emphasised that it’s critical that projects are financially ‘ready’. Investors need confidence in delivery, sufficient equity support, clear contractual frameworks and dependable long-term cash flows.

This is where standardisation and replication matter.

Once a model has been proven, the time and friction involved in bringing future projects to market can reduce materially. Shelley pointed to Direct Procurement for Customers (DPC) and Specified-Infrastructure Projects Regulator (SIPR) style models as examples of structures that could, over time, build a more scalable and investable pipeline, particularly in sectors such as water infrastructure.

Ted Frith, Managing Director of Business Development at Equitix, reinforced the same point from a fund manager perspective. The UK has made progress, but the market still lacks enough clear, proven funding models, particularly in social infrastructure. Replicable structures, rather than one-off transactions, are what will help turn local demand into an investment market that can absorb larger volumes of institutional capital.

The Local Investment Challenge and Opportunity

For investors focused on local or place-based strategies, infrastructure presents both an attractive opportunity and a practical challenge.

It is attractive because infrastructure is foundational. Power, transport, digital connectivity, healthcare facilities and other social infrastructure can unlock wider economic activity and support investment across housing, regeneration, SME finance and clean energy.

But it is also challenging because “local” is not always straightforward to define, especially in the context of pooling, differing regional geographies and varied local priorities.

The discussion highlighted that place-based investment needs to go beyond simple geography. It is not just about where an asset is located, but whether it responds to local need, aligns with regional priorities and delivers tangible outcomes for communities.

For LGPS pools and other allocators, that means local strategies must be practical as well as ambitious. It may not be realistic on day one to deploy large allocations into narrowly defined local geographies, especially where investable pipelines are still emerging. A broader regional definition may initially be more workable, with the potential to become more targeted over time as the market matures.

Collaboration Will Be Essential

One of the clearest conclusions from the webinar was that infrastructure investment at the local level will only succeed through stronger collaboration across the ecosystem.

That includes pension pools, fund managers, public funders, local and combined authorities, developers, operators and government.

It also means sharing models and learning across regions, rather than reinventing structures project by project. Ted Frith made the case that many infrastructure needs are common across the country. Whether the issue is primary care centres, low-carbon transport or other forms of social infrastructure, there is a strong case for creating scalable models that can be adapted locally, rather than starting from scratch every time.

For smaller projects in particular, aggregation may be essential. A single project may be too small to attract institutional capital efficiently, but a bundled pipeline of similar assets can create sufficient scale for investors and lenders to participate.

This is where place coalitions, regional coordination and initiatives such as The Good Economy’s PBI Network can play an important role – not only in identifying need, but in connecting that need to viable funding and delivery structures.

Lessons From the Market

The webinar also explored practical examples of where this model is beginning to work.

Ted Frith highlighted Viridor’s energy-from-waste assets as an example of infrastructure delivering local benefits while evolving in line with environmental priorities. Viridor’s innovative solutions to recover energy from waste address a pressing local waste challenge, reduce reliance on landfill, generate energy, and increasingly incorporating cleaner technologies and carbon capture capabilities.

Shelley D’Souza discussed the Haweswater Aqueduct Resilience Programme (HARP) project, the first to close under the DPC framework, where the National Wealth Fund worked alongside Equitix, STRABAG and long-term investors to support a major water infrastructure transaction. The HARP project aims to maintain drinking water supplies across Cumbria, Lancashire and Greater Manchester through the replacement of six tunnel sections along the pipeline route. The project illustrates how public capital can be used strategically to provide additional comfort to lenders and institutional investors, helping new models reach financial close and paving the way for future projects.

These examples matter because they show what investors often need most: precedent.

What Needs to Happen Next?

Looking ahead, the panel identified four key priorities for the next five to ten years:

1. The market needs more projects to reach close. Momentum will build through execution, not only through strategy.
2. Standardisation will matter. Proven contractual and financing models can shorten development timelines and improve investor confidence.
3. Capability needs to deepen across the public sector. More investment expertise within local and regional government will help bridge the gap between policy intent and market expectations.
4. The UK must continue to offer a stable and predictable investment environment. Institutional capital values long-term clarity, and policy consistency remains a key determinant of investor appetite.

Success will be visible when local infrastructure becomes a larger and more established part of institutional portfolios – not as a policy obligation, but because investors see a credible combination of return, resilience and impact.

A Market Taking Shape

The UK is not starting from zero. There are already important examples of local and national infrastructure investment working in practice, and a range of institutions are now actively shaping the market.

But this remains an emerging space. The opportunity is significant, yet unlocking it will depend on stronger partnerships, better project preparation, clearer delivery models and continued policy follow-through.

For institutional investors, the message from the webinar was clear – infrastructure has the potential to be a cornerstone of place-based local investing strategies, supporting local growth, resilience and net zero while meeting core portfolio objectives.

The task now is to turn that potential into a repeatable investment market.

TGE’s advisory services team works with players across the investment ecosystem to help clients design and deliver Place-Based Investing (PBI) strategies that are practical, evidence-based and aligned with local investing policy priorities.

You may also be interested in our PBI Network which brings together asset owners, fund managers, place-makers and public leaders to help them collaborate, share knowledge, and co-create practical solutions for scaling local investing and support productive finance. Membership includes roundtables, webinars, thought leadership, networking, and access to market insight and emerging standards.

If you’re interested in joining the PBI Network, you can:

• Read more about the network on our website
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