The sudden onset of the Covid-19 crisis placed a significant and immediate burden on the UK’s economy and public finances. As a key enabler of growth, infrastructure will play an important role in the UK’s economic recovery in the aftermath of Covid-19. Focusing on infrastructure delivery will help stimulate the renewal of the UK’s economy, and transition it to a fairer, more sustainable economy.
Businesses welcome the government’s commitment to infrastructure delivery in the UK, however they also recognise that the scale of the finance required highlights the critical role that private sector investment will have to play if this gap is to be filled, and if the UK government is to successfully implement its ambitious infrastructure agenda.
While current investor appetite for infrastructure is high, factors such as cumulative prudential regulation, and a lack of clarity on the pipeline of upcoming projects requiring private investment may have a negative effect on investors’ ability to invest in the coming years.
For the planned investment to be forthcoming, and as the UK emerges from the Covid-19 crisis, the government therefore needs to develop a world-class environment for private investment in infrastructure.
Against this backdrop the CBI have published a new report - Investing in infrastructure - that sets out businesses’ views on private sector investment in UK infrastructure, and also sets out the steps government should take to increase private sector investment. The paper aims to help the government ensure it delivers the infrastructure necessary to meet the social and economic needs of the country as we try to build back better from the Covid-19 crisis.
Businesses were invited to share their views on topics including: the barriers to private finance and investment in UK infrastructure, the National Infrastructure and Construction Pipeline, the UK infrastructure market’s governance arrangements, and infrastructure finance delivery models.
The report lays out steps that should be taken by government, including:
- The creation of a UK infrastructure bank, which could form part of a larger investment institution to support the economic recovery
- Empowering the National Infrastructure Commission and Infrastructure and Projects Authority to hold the government to account on infrastructure delivery by giving them greater operational independence
- Reforms to the National Infrastructure and Construction Pipeline to more clearly outline which infrastructure projects the government is seeking private finance for, and the private finance delivery model that will be utilised in each case
- Expanding regulators’ toolkits beyond price controls to prevent under-investment and encourage the use of better alternatives to achieve the UK’s long-term infrastructure needs.
To read the full list of recommendations, download Investing in infrastructure.
The CBI will continue to engage with its members to ensure it can provide further analysis on the practical steps government can take to create a world class environment for private sector participation in UK infrastructure.
If you would like to discuss our work on infrastructure finance, please contact Daniel Woolf.