Recommendation made to kick-start infrastructure projects
Public sector funds should be used to underwrite infrastructure investment by the private sector, according to business lobby group the CBI.
The recommendation is one of several made in the CBI’s “An offer they shouldn’t refuse” report, which sets out measures to generate the £250 billion needed to fulfil the government’s national infrastructure plan.
According to the CBI, the UK’s infrastructure quality has fallen to 28th in the world, behind countries including China, Germany, Czech Republic and Croatia. The lobby group is calling on the government to facilitate major investment in the infrastructure network.
The call comes six months after Norman Foster published a self-funded proposal for a £50 billion infrastructure plan, produced in partnersip with Halcrow, including a Thames Estuary Airport and high speed rail network.
The CBI wants the government to provide “credit enhancement” for infrastructure, such as putting up a minority share of project funding but placing itself lower in the ranking of creditors in the case of any loss. Other suggestions include capital allowances and tax credits.
CBI director general John Cridland said: “Infrastructure spending offers the UK the elusive boost we are all seeking. Business has been disappointed that we haven’t made more headway in the past six months, and hopes that this report will act as a catalyst.
“If we want to see the billions of pounds needed to upgrade our ageing infrastructure and secure jobs and growth for the long term, the government must make smarter use of limited public finances. By underwriting and lifting the credit rating of certain infrastructure assets, it can make them less risky and more attractive to investors.”
While the construction sector is broadly in agreement that infrastructure investment needs encouragement, some have warned that access to finance is not the only hurdle to be overcome.
One economist told BD the government must also produce a set of priorities in key areas such as roads and aviation. “There’s a complete policy vacuum in some major areas,” he said. “In transport there is not a very clear set of objectives and policies that the government has set out. That vacuum is a major problem for investors.”