Unlocking the UK’s Infrastructure Potential through Partnership

Key takeaways

The UK has big infrastructure ambitions, but, after decades of underinvestment, more capital needs to be mobilised to achieve them.
The UK government is signalling a step-change in its approach, by increasing public monies and introducing reforms that can unlock pension capital to support new investment.
Partnerships between policymakers, investors and business are key to deliver investment possibilities for pension funds, support economic growth and meet the needs of local communities for decades to come.

The UK has ambitious plans to create world-leading transport, energy and digital networks, to reverse half a century of underinvestment and strengthen our economy amid increasing global decarbonisation efforts. Achieving them will require regulators, companies and investors working together to build a new infrastructure ecosystem that encourages greater investment.

The centrepiece of the strategy is to raise infrastructure investment levels significantly. The National Infrastructure & Service Transformation Authority states the UK government will provide £725 billion in funding for infrastructure to meet its 10-year infrastructure strategy goal by 2035.¹ That represents a marked rise on previous infrastructure spending, which averaged £55 billion a year over the decade to 2023.²

To achieve this target, the UK government intends to greatly increase public monies for investment, while asking its public finance institutions such as the National Wealth Fund and British Business Bank to work in partnership with private investors across a range of areas. In addition, the government is introducing a series of reforms that have the potential to unlock billions of pounds in defined contribution (DC) and local government pension scheme (LGPS) assets to support infrastructure investments in this country.³

It also has an ambition to establish large, sophisticated UK pension funds similar to Australia and Canada, which invest in infrastructure assets and companies with high growth potential. The UK government believes local versions of such funds “could deliver around £80 billion of investment in exciting new businesses and critical infrastructure while boosting DC savers’ pension pots”. ⁴

The UK government’s efforts to ease regulatory constraints and encourage investment partnerships should unearth many more infrastructure and private market investment opportunities.

Phelim Bolger

Head of UK & Ireland, Global Client Solutions

Partnering for Progress

We are already seeing this policymaker impetus being transformed into positive action.

In May 2025, 17 of the UK’s largest DC pension schemes signed the Mansion House Accord, which voluntarily commits them to invest up to 10% of their main default funds in private markets. Half of that will be specifically earmarked for the UK.

One of the 17 signatories is Nest – the UK’s largest workplace DC scheme by membership.⁵ As part of its goal to increase private market investments, it has taken a 10% shareholder stake in IFM Investors’ holding company and is seeking to capitalise on significant UK private market investments and unlock new opportunities across the globe.

Through this partnership, Nest becomes the latest pension fund to carry forward a journey that began 30 years ago, when Australian pensions funds established IFM Investors to invest at scale in the businesses that underpin society.

Nest takes a similar attitude to its responsibilities. Elizabeth Fernando, CIO at the pension provider, firmly believes her responsibility is to ensure the money of its members is invested in a manner that provides them with meaningful returns, while supporting the environments and communities where they live. She believes infrastructure investing can help achieve that.

“If the scheme can make investments that make sense from a financial point of view, while also improving quality of life, it is a powerful combination,” Fernando says. “Ultimately infrastructure investment, when done correctly, helps productivity which in turn turbo charges growth and creates a virtuous circle.”

IFM Investors is a natural partner for Nest. For over 20 years, we have supported businesses in the UK that help to strengthen local economies and built resilient communities. Today, funds managed by IFM Investors have invested close to £7bn in the UK, supporting around 30,000 jobs. We seek to generate positive environmental and social impacts in the communities where our assets operate, as part of our wider mission to invest, protect and grow the retirement savings of working people.

Partnership Taking Flight

IFM understands that successful infrastructure investing rests upon partnerships. Manchester Airports Group (MAG) is one example of this. We established a public private partnership with Manchester Council in 2013, and in the years since have provided patient, hands-on support to help MAG expand high-quality airport operations.

This has resulted in MAG investing £1.3 billion in Manchester airport. Much of this amount has been directed into the local community, boosting jobs, skills, education and regeneration. It is currently planning a £1.1 billion commitment for Stansted Airport that will expand the existing terminal by a third, secure new air routes to key destinations, boost local supply chains and employment while growing the UK tourism economy.⁶

£1.3 billion Invested by MAG into Manchester airport

£1.1 billion Planned MAG investment into Stansted airport

The airport organisation also has an extensive and ambitious sustainability strategy in place. It aims to be Net Zero carbon by 2038 and was the first airport group in the UK to be certified as carbon neutral in 2016.

Ken O’Toole, CEO of MAG, says that IFM’s long-term patient approach aligns well with his business. MAG’s investment horizons typically span 25 years and include decarbonisation goals and local community recruitment and training initiatives.

“That long-term perspective allows us to invest with confidence and align with broader economic growth,” he says.

Investing in the UK’s Future, Together

The UK government’s efforts to ease regulatory constraints and encourage investment partnerships should unearth many more infrastructure and private market investment opportunities.

By working with strategic partners, UK pension funds have the potential to identify projects that can deliver investment returns, while supporting economic growth and local communities for decades to come.

Ongoing partnerships across the investment chain will be the key to success. Policymakers, investors and businesses all have roles to play in seeking to deliver sustainable returns for pension members while supporting the communities and economies those investments serve.