The sudden onset of the Covid-19 crisis placed a significant and immediate burden on the UK’s economy and public finances.
As a response to the economic downturn created by the pandemic, the UK Prime Minister, Boris Johnson, reiterated the government’s commitment to driving infrastructure delivery. The UK’s approach is consistent with our international partners, as it has been reported that countries are planning to increase infrastructure investment to levels not seen since the post-2008 financial crisis stimulus measures.
Businesses welcome the government’s commitment to infrastructure delivery in the UK. As a key enabler of growth, and in the aftermath of Covid-19, infrastructure will play an important role in the UK’s economic recovery. Focusing on infrastructure delivery will help stimulate the renewal of the UK’s economy, and a transition it to a fairer, more sustainable economy.
However, 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.
To this end, the CBI have published a new report - Investing in infrastructure - that sets out businesses’ views on private sector investment in UK infrastructure, and also lays 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.
The private sector’s mandate for operating in infrastructure has been weakened in recent years, as the benefits of business involvement have been overlooked. This is despite the fact that there are many examples of private contracts in infrastructure which have delivered fair returns for all parties, and beneficial outcomes for society. To this end, the paper also outlines how the government, and businesses, can work together to strengthen the private sector’s mandate to operate in UK infrastructure.
Rebuilding public trust in private finance is not something that industry can do alone. Businesses would therefore like to see a joint effort with government to promote the benefits and expertise the private sector brings to UK infrastructure.
To read the full list of recommendations, download Investing in infrastructure.
The CBI will continue to 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.