£100bn? Excellent - but devil is in the detail

Richard Robinson
30 October 2015

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National Infrastructure Commission

Planning

Government should be lauded for changes to UK infrastructure policy, which have undoubtedly buoyed investment in the sector in recent years, but more must now be done to turn momentum into delivery, says AECOM's Richard Robinson.

It seems UK business is in agreement, with 62% of respondents to the 2015 CBI/AECOM Infrastructure Survey – published yesterday – concerned with the pace of progress on the delivery of infrastructure projects.

Moves such as the creation of the National Infrastructure Commission and the use of government guarantees to boost investment are certainly welcome news. Indeed almost half of firms see UK infrastructure improving not deteriorating. Yet given the strong correlation between infrastructure investment and economic improvement, delays and never-ending reviews of vital infrastructure are stalling the UK’s growth.

Take the current aviation capacity crisis in the South East. The message from businesses on this issue is clear: political procrastination is costing the UK economy. An overwhelming 91% of firms urge government to swiftly implement the recommendation of the Airports Commission and deliver new runway capacity, with 41% saying failure to tackle aviation capacity is harming their business.

Uncertainty in the energy sector is also a cause for concern. Almost three-quarters of respondents to the survey report energy security as crucial and the vast majority (97%) want to see investment in a diverse, secure energy mix. Resilience of energy supply is clearly a priority, yet 90% of firms see investment in new generation to help tackle the problem at risk from short-term changes to policy. Unexpected policy changes undoubtedly deter private investment.

"Delays and never-ending reviews of vital infrastructure are stalling the UK’s growth"

The recent scrapping of the Climate Change Levy exemption and changes to the Renewables Obligation have dampened investor confidence in the renewables market for example. But government’s decision to underwrite Chinese investment in the Hinkley Point C nuclear power station is a positive step. Further action like this will go a long way to giving business the much-needed reassurance it needs that delivery of the UK’s pipeline of projects will be accelerated.

Key for infrastructure providers is the need for faster, more politically robust decisions on infrastructure, with 96% citing this as significant or very significant in boosting finance. Such clarity would also help industry develop the right skills to deliver planned infrastructure.

The National Infrastructure Plan for Skills goes some way to mapping expertise against pipeline projects. But given the vital role of apprenticeships in addressing the country’s skills challenge, the government’s plans for the new Apprenticeship Levy are somewhat disappointing. UK employers now face extra costs and bureaucracy when many are already investing in skills. 81% of firms argue improved apprenticeship funding from government is the most important factor in addressing the challenge.

In the absence of government support, greater clarity of the project pipeline is ever more critical. Industry needs a clear and consistent vision for new infrastructure, and for government to have the courage to make politically charged decisions when they are in the long-term interests of the country. After all, when infrastructure decisions are delayed, business feels the pain.

Richard Robinson is chief executive, civil EMEA and India for AECOM