CBI: Budget breakdown: Infrastructure
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Budget breakdown: Infrastructure

 Full 2012 budget analysis (pdf)

On infrastructure, the Chancellor gave the right pro-growth signals and talked up the need for investment. The proof of the pudding will come later though, with many important announcements yet to be revealed – the NPPF and aviation capacity for example. It is disappointing that there was no sign of taking up the CBI’s calls for changes to the capital allowance structure to incentivise investment in infrastructure – state aid rules were considered too difficult to clear.

Planning

The Chancellor made encouraging noises about next week’s publication of the NPPF, talking up the need for a pro-growth planning system. Most importantly, the Budget document talks of a “powerful” presumption in favour of sustainable development that should give confidence to businesses. It will also create a strong incentive for local authorities to engage their communities in developing local plans. Of particular note is the absence of a transition period, with the Budget document stating that the framework will come into force for plan-making and decisions from the end of March 2012. We will be responding in more detail once the framework is published on Tuesday.
Following recent strong CBI lobbying on fine-tuning the major infrastructure planning system, we were pleased to see commitments in the Budget to bring forward legislation to adjust the scope of Special Parliamentary Procedure. The current use of SPP means there is an open-ended timeframe at the end of the planning process, which increases uncertainty and damages investor confidence. Furthermore, government pledged to publish revised guidance and remove duplication in the consenting regime to clarify and improve the system.

Pension fund investment

The establishment of the Pension Infrastructure Platform, which will begin to invest £2bn in UK projects in early 2013, is welcome. Pension funds can provide a much needed cash injection to infrastructure investment, while the assets will provide them with the stable, long-term returns they seek. We hope the PIP becomes a key player in the infrastructure market in the next few years. The CBI is currently working on further models needed to incentivise pension fund investment in infrastructure and will be publishing a report in the Spring.

Digital

The government’s commitment to supporting the private sector to deliver world-leading superfast broadband is encouraging. The confirmation of the ten ‘super-connected cities’ – Belfast, Birmingham, Bradford, Bristol, Cardiff, Edinburgh, Leeds, London, Manchester and Newcastle – and further roll-out of £50m of public money to support a second wave of smaller cities to fulfil digital aspirations is a positive move. The lynchpin will be the role of the private sector in delivering this roll-out. Furthermore, government has committed to extending mobile coverage along at least ten roads by 2015, including the A2 and A29 in Northern Ireland, the A57, A143, A169, A352, A360 and A591 in England, the A82(T) in Scotland and the A470(T) in Wales, subject to planning permission, using the £150 million investment announced at Autumn Statement 2011.

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