Pace of infrastructure project pipeline delivery too slow, says UK business

UK infrastructure quality is increasing but vital economically significant infrastructure projects are still progressing too slowly, according to CBI/AECOM survey of UK businesses.

Antony Oliver
28 October 2015

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Turning Momentum into Reality

Two thirds of UK businesses believe that the pace of vital infrastructure project delivery in the UK is still too slow with over half doubting that upgrades across the nation’s vital assets will be complete within five years.

According to the survey of 722 UK firms and report by the business lobby group CBI and consultant AECOM, the quality of infrastructure is crucial to the economy, with 94% of businesses saying that it remains a key factor when planning investment.

“The arteries of modern Britain are working overtime. Whether it’s our creaking railways, clogged roads, and crowded runways, or our digital links and the energy to power them struggling to keep up, businesses now want the Government to deliver the large scale upgrades that it has made ambitious strides towards." John Cridland, CBI

However, despite political momentum building over the last five years behind the need to boost investment, the report "Turning Momentum into Reality" shows a clear consensus over the need to speed up the delivery of projects in this Parliament, and to reverse decades of underinvestment and policy change, says the report published this week.

“Delivery of key projects – from where we build a new runway to how we power our industry and homes for the future – must be the crowning achievement of this Parliament,” said John Cridland, CBI Director-General. “That doesn’t just mean taking the tough decisions for the long-term. It means better planning and having the right skills in place to ensure there is seamless continuity from when the green light is given for action to getting spades in the ground.” 

He added: “The arteries of modern Britain are working overtime. Whether it’s our creaking railways, clogged roads, and crowded runways, or our digital links and the energy to power them struggling to keep up, businesses now want the Government to deliver the large scale upgrades that it has made ambitious strides towards. The quality of infrastructure is a key factor in firms’ investment decisions, so businesses, communities and the whole country simply can’t afford the cost of inaction.”

The survey highlights that twice as many firms (43% of all businesses and 49% of infrastructure providers) now see UK infrastructure improving rather than of deteriorating (23%). But with £411bn of critical projects slated in the National Infrastructure Plan, business urges governemtn to press forward at pace.

Other key findings include:

• Greater sight of a longer-term pipeline of infrastructure opportunities is a key ask for nearly 9 in 10 providers (86%).
• Almost all firms (98%) want to see an evidence-based approach to long-term infrastructure decisions. 99% of firms see this as the top priority for George Osborne’s National Infrastructure Commission.
• With 85% of infrastructure firms seeing red tape in the planning system as a significant barrier, 70% are prepared to pay higher fees for quicker decisions.
• A clearer national pipeline of projects and greater collaboration between businesses is a priority for boosting skills (71% each).

Key schemes highlighted by business as vitally needed now include a new runway in the South East (important to 91% of firms), upgrades to the rail network (45% of firms want spending increased), and investment in a diverse, secure energy mix (vital to 97% of firms).

“Industry needs the Government to maintain a clear and consistent vision, and to have the courage to make politically charged decisions when they are in the long-term interests of the country. Delays and never-ending reviews of vital infrastructure stall progress and help nobody." Richard Robinson, AECOM

Richard Robinson, AECOM chief executive - Civil Infrastructure, Europe, Middle East, India and Africa pointed out that continued political procrastination over infrastructure threatened the UK’s economic growth and jeopardised potential investment. 

“When infrastructure decisions are deferred, business takes the hit,” he said. “The challenge for Government is to build business confidence, fostering a financial and operational climate that accelerates delivery.

He added: “Industry needs the Government to maintain a clear and consistent vision, and to have the courage to make politically charged decisions when they are in the long-term interests of the country. Delays and never-ending reviews of vital infrastructure stall progress and help nobody.

The survey report points out that recent initiatives such as the creation of a National Infrastructure Commission and the National Infrastructure Plan for Skills are welcome by business and plans to devolve spending powers was also “greeted with optimism”, with 61% of firms believing it will improve delivery of local infrastructure.

“Business and Government are on the same page on the need to invest in our infrastructure future, as we have seen with the creation of the National Infrastructure Commission. But that hasn’t stopped wrong turns being taken,” said Cridland.

Key finding sector by sector

Energy:

With nearly three quarters (74%) of firms saying energy security is crucial, almost all businesses (97%) see investment in a diverse and secure energy mix as vital.

90% of firms believe investment is put at risk by short-term changes to policy, reflecting recent uncertainty over the Government’s renewables policies.

91% of firms see a role for Government in helping businesses to manage their energy costs, with 88% seeing simplification of the energy efficiency landscape a vital step.

Rail:

81% of firms see rail as crucial to their operations. With rail journeys growing faster in the UK than in France or Germany, 90% of businesses see increasing capacity as a priority.

45% of companies believe capital spending should be increased beyond what was promised in the last Parliament.

More than half of firms (55%) support HS2, but 92% say their support would be boosted with a clearer picture of how the project sits in the longer-term plan for the UK’s railways.

Roads:

96% of businesses are concerned about congestion on Britain’s roads, which costs the economy £8 billion each year (according to the RAC Foundation).

89% of firms see investment in motorways and local roads as crucial or beneficial, and more than half (56%) want to see further increases in spending, rising to two thirds (67%) in Scotland and Wales.

To boost investment, almost three quarters (72%) are open to the idea of road charging.

Over 90% of firms are concerned about the poor quality of the UK’s roads.

Aviation:

92% of firms see flights to one or more market as crucial or important. 65% view flights to the US as crucial or important, followed closely (64%) by flights to emerging markets.

However, under half of businesses (45%) believe our connections to emerging markets are fit for purpose, and 39% see domestic links as problematic.

Nearly all firms (91%) see a new runway in the South East as crucial or important. 41% of all businesses (and 50% of London firms) are already being impacted by the lack of runway capacity.

Digital:

While 72% of firms report improvements in digital networks in the past five years, 59% are dissatisfied with their current quality. Greater reliability is seen as crucial by over four fifths of firms (84% for fixed line and 81% for mobile connections).

The rapid digitisation of business means improved speed is key - this is most keenly felt by SMEs, 78% of which say it is important for fixed line connectivity.

Creating the right environment for delivery

Local planning:

With 85% of infrastructure firms seeing red tape in the planning system as a significant barrier, 70% are prepared to pay higher fees for quicker decisions.

Skills:

A clearer national pipeline of projects and greater collaboration between businesses is a priority for boosting skills (71% each).

Financing infrastructure:

Greater sight of a longer-term pipeline of infrastructure opportunities is a key ask for nearly 9 in 10 providers (86%).

With 78% of investors concerned that the risk of future policy change is holding back investment, almost all infrastructure providers (96%) want to see more politically robust decision making.

Devolution:

Nearly two thirds (61%) of UK firms – and 73% of English firms – believe devolution will improve the delivery of local infrastructure.

79% of infrastructure providers view certainty of revenue, and 76% see local business leadership, as crucial to driving this improvement.

Taking decisions:

Almost all firms (98%) want to see an evidence-based approach to long-term infrastructure decisions. 99% of firms see this as the top priority for George Osborne’s National Infrastructure Commission.

92% of firms want greater engagement with communities impacted by infrastructure decisions, and 91% believe better explanation of the local benefits of new infrastructure is key.