Government spending plans unveiled in March’s Budget included historic £640billion infrastructure pledges designed to revitalise Britain’s roads, railways, broadband and housing as part of the nation’s levelling-up agenda.
Since then, the pandemic has placed an enormous and unexpected burden upon the UK economy. However, the financial strain resulting from Covid-19 must not be allowed to derail infrastructure spending ambitions, according to Investing in infrastructure, a new paper released yesterday (Monday) by the CBI, which highlights the crucial role private finance can play in delivering on these promises.
Investing in infrastructure lays out a series of recommendations to government on how to attract increased private sector investment to deliver the infrastructure necessary for Britain to not only build back better from the current crisis, but also drive growth and productivity across the UK’s regions.
Key among those recommendations is – in the event the UK ends its participation with the European Investment Bank, which provides infrastructure funding – for the government to create a UK infrastructure bank to help deliver infrastructure and support the economic recovery.
The report outlines the proposed bank’s role of focusing on crowding in private finance by reducing risks, promoting market stability, and increasing investor confidence.
Other recommendations include giving additional powers to the National Infrastructure Commission and Infrastructure and Projects Authority – offering them greater independence and authority to hold government to account on infrastructure delivery – and reforming the National Infrastructure and Construction Pipeline to boost confidence in the market and provide clarity about opportunities for potential private sector investors.
Matthew Fell, Chief UK Policy Director at the CBI, said: “Prior to the outbreak of Covid-19, businesses welcomed the government’s commitment to deliver an ‘infrastructure revolution’ and interpreted it as a clear sign that the government was serious about delivering on its levelling-up agenda.
“While the UK government’s commitment to delivering infrastructure remains undeterred, the country’s fiscal position has substantially worsened. In this context, the private sector now has an even more important role to play in helping to bridge the funding gap needed to deliver the government’s vision for UK infrastructure.
“To support its ambitious infrastructure agenda and provide better connectivity, at good value for taxpayers, the government must reinvigorate the UK infrastructure market tackling concerns about regulation and a lack of clarity about investment opportunities.
“The government must commit to an approach that gives confidence to investors and capitalises on the attributes of businesses and public sector establishing itself once again as a world class destination for investment.”
Rob Hopwood, planning partner at Cambridge-based property consultancy Bidwells, commented: “It’s no secret that the UK’s fiscal position has worsened as a result of Covid-19, so private investment is going to be crucial to leveraging major infrastructure and housing projects across the UK post-crisis.
“The European Investment Bank has bankrolled some of the UK’s most successful regeneration projects, including the London Docklands. As we prepare to depart from the EU, and a deal looks no closer, it’s vital that investors and developers, regardless of size, have access to big ticket projects and finance. This would help generate inward investment and create thousands of jobs at a time when the country is certainly going to need them.
“CBI’s proposals will be crucial in capturing the potential of the UK’s life sciences industry – a sector which has led the UK’s economic response to the coronavirus. In the Oxford-Cambridge Arc, where UK R&D has a critical mass, a lack of infrastructure investment in threatening to stifle growth by pricing out business and talent.
"At the heart of any innovation districts are anchor tenants – such as academics or major tech firms – but their successes depends on great transport links and a focus of sustainable development with access to affordable homes. Strict and immovable deadlines for planning, financing and the construction of big ticket infrastructure must be set, while encouraging the private and public sector to share risk. It was due to the successful implementation of these parameters that the 2012 Olympics were such a huge success.”