If there was ever a sign that infrastructure has a key role to play in delivering on the government’s levelling up agenda, this 2020 Budget was it.
The Chancellor not only pledged £600bn to infrastructure, making public net investment the highest it has been since 1955, but he also made a point of committing investment for regional transport projects, delivering on the promises made to the ‘red wall’ of voters who voted Conservative in the last election.
What matters now is making sure this ground-breaking commitment translates into real infrastructure being built quickly – and the CBI will be working closely with members over the coming months to ensure that this significant capital expenditure is deployed effectively.
Connecting the country
In our submission to the Budget, the CBI called for investment in transport connectivity right across the country, including roads, rail and urban transport. To meet this ambition, the Chancellor announced a range of new policies including:
- Backing the Midlands Rail Hub and committing to rail station upgrades around the country
- Confirming the second Roads Investment Strategy, which will see billions invested in the UK’s Strategic Road Network and increased funds available to improve the quality of local roads
- Green lights for stalled projects such as dualling and tunnel work to upgrade the A303 and East London’s Lower Thames Crossing
- More than £1bn of planned funding to support placemaking up and down the UK in the government’s Transforming Cities Fund and more than £4bn for the UK’s eight Mayoral Combined Authorities
- Dedicated funding for bus networks, cycle lanes and tram systems in key cities across England.
Businesses stand ready to deliver these vital projects. Most importantly, employers and communities stand to gain in the long run from new jobs, economic growth, and productivity benefits across the UK.
Boosting Affordable Housing
The Budget provided an opportunity for government to ease the current affordability challenges in the UK housing market. The CBI has called for greater financial support for affordable housing, and the Budget recognised this with several announcements:
- Reducing the interest paid on Public Works Loan Board loans to support investment in social housing and making an additional £1.15bn of loans available
- Committing more than £12bn to Homes England’s Affordable Homes Programme and an additional £9.5bn from 2021/22 to support the delivery of more affordable homes over a five-year programme
- A new fund to encourage local authorities to bring forward brownfield developments to unlock a greater use of land
- Signposting greater detail to come from Housing Secretary Robert Jenrick, including more information on a forthcoming Planning White Paper.
CBI members will welcome this focus on the affordability challenges in the housing market but will know that specific details about how the funding programmes will be allocated – and who can benefit from them – are key, with these yet to be announced.
Tackling the long term
This budget signalled that this government is planning for the long term, with a commitment to complete a review into the Green Book, which will evolve the guiding principles for how major investment programmes are appraised. The CBI welcomes this review and will be making the case for the value of truly integrated infrastructure delivery that brings prosperity and productivity right across regions where projects go ahead.
However, the pledges of a full-scale of an infrastructure revolution did not result in the long-awaited National Infrastructure Strategy (NIS), which was delayed again into the Spring. Whilst acknowledged in his speech by the Chancellor, the industry has been ready to deliver this government’s ambitions for the country’s connectivity and awaiting a plan to make the UK a great place to invest. Actions now speak louder than words and the comprehensive NIS is soon needed.
Similarly, despite recent challenges to Heathrow expansion and a clear eye on the UK’s carbon commitments, there was little in the Budget on aviation, other than an announcement of the review on Air Passenger Duty (APD). The Chancellor did not mention the Aviation Strategy, which will be equally key to improving regional and national connectivity. As part of the UK’s ambition to be a globally competitive trading nation, aviation has a long-term role to play and CBI members will want to see a sustainable vision for growth over the coming decades published soon.
Businesses and investors have been calling on the government to set out how private finance can ease the pressure on public finances to deliver large-scale infrastructure and energy plans. Since the previous government signalled the end of Private Finance Initiative / Private Finance 2, an alternative model has yet to be put forward.
This leaves a continuing gap between the rhetoric on infrastructure spend and the requirement for increased private investment to accelerate delivery. The government’s promised Infrastructure Finance Review will need to set out clear objectives for attracting and facilitating private finance and it must be published soon if the industry is to mobilise at the pace required.
What happens next?
The run up to the comprehensive spending review in the Autumn is set to be a busy time for infrastructure. This will include outstanding government responses to the Williams Rail Review, Infrastructure Finance Review and the above-mentioned NIS, as well as upcoming consultations on aviation tax reform and the Green Book.
The government has signalled new white papers on Social Housing and Planning, which have the potential to shake-up the delivery of homes, and scrutiny will be required to make sure these work for residents and tenants around the country.
The CBI will be responding and engaging on each of these in the months to come through our campaigns 'Unlocking the UK’s infrastructure pipeline' and 'Transform the journey: better commutes for all'.
To get involved on this major area of work, please get in touch with Tim Miller, Liz Crowhurst or Tania Kumar.