The sudden onset of the Covid-19 crisis has placed a significant and immediate burden on the UK economy and public finances.
In response to the economic downturn created by the pandemic, British Prime Minister Boris Johnson reiterated the government’s commitment to boost delivery of infrastructure. The UK’s approach is in line with that of our international partners, as countries have been reported to plan to increase infrastructure investment to levels not seen since the post-2008 financial crisis stimulus measures .
Businesses welcome the government’s commitment to providing infrastructure in the UK. As a key factor for growth, and in the aftermath of Covid-19, infrastructure will play an important role in the UK’s economic recovery. Focusing on the provision of infrastructure will help stimulate the renewal of the UK economy and its transition to a fairer and more sustainable economy.
However, the scale of the funding required highlights the critical role that private sector investment will need to play if this gap is to be closed and if the UK government is to successfully implement its ambitious infrastructure program.
To this end, the CBI has released a new report – Investing in Infrastructure – which sets out a business perspective on private sector investment in UK infrastructure, and also outlines the steps the government should take to increase investment. from the private sector. The document aims to help the government ensure it provides the necessary infrastructure to meet the country’s social and economic needs as we try to rebuild better after the Covid-19 crisis.
Companies were invited to share their views on topics such as: barriers to private finance and UK infrastructure investment, the National Infrastructure and Construction Pipeline, UK infrastructure market governance arrangements and models of infrastructure financing.
The report sets out actions the government should take, including:
- The creation of an infrastructure bank in the UK, which could be part of a larger investment institution to support economic recovery
- Empower the National Infrastructure Commission and the Infrastructure and Projects Authority to hold the government to account for the provision of infrastructure by giving them greater operational independence
- Reforms of the national infrastructure and construction pipeline to more clearly define the infrastructure projects for which the government seeks private funding and the private funding delivery model that will be used in each case
- Extend regulators’ toolkits beyond price controls to avoid underinvestment and encourage the use of better alternatives to meet the UK’s long-term infrastructure needs.
The private sector’s mandate to operate in infrastructure has been weakened in recent years as the benefits of business participation have been overlooked. This despite the fact that there are many examples of private contracts in the field of infrastructure that have generated fair returns for all parties and beneficial results for society. To this end, the document also describes how government and business can work together to strengthen the private sector’s mandate to operate in UK infrastructure.
Restoring public confidence in private finance is not something the industry can do on its own. Businesses would therefore like to see a joint effort with the government to promote the benefits and expertise that the private sector brings to UK infrastructure.
To read the full list of recommendations, download Invest in Infrastructure.
The CBI will continue to provide more in-depth analysis on practical steps the government can take to create a world-class environment for private sector involvement in UK infrastructure.
If you would like to discuss our work on infrastructure finance, please contact Daniel Woolf.