CBI: Private investment needed to drive construction’s recovery
Private investors can be a major driver in a plan to revitalise UK roads, railways and housing at a time when public funds are stretched by covid-19 support measures.
That’s the message from a new report by the Confederation of British Industry (CBI), which warned that the financial strain from covid-19 must not be allowed to derail plans unveiled by the government in March’s Budget to spend £640bn on infrastructure.
The report, Investing in infrastructure, published by the CBI today (7 September) highlights the role that private finance can play in delivering on these promises.
Key among its recommendations is – in the event the UK ends its participation with the European Investment Bank, which provides infrastructure funding – for the government to create a UK infrastructure bank to help deliver infrastructure and support the economic recovery.
The report outlines the proposed bank’s role of focusing on drawing in private finance by reducing risks, promoting market stability, and increasing investor confidence.
Other recommendations include giving additional powers to the National Infrastructure Commission and Infrastructure and Projects Authority – offering them greater independence and authority to hold government to account on infrastructure delivery – and reforming the National Infrastructure and Construction Pipeline to boost confidence in the market and provide clarity about opportunities for potential private sector investors.
Construction enables economic growth
CBI research shows infrastructure investment is a key enabler of economic growth, and that for every £1 spent on construction activity, £2.92 is created in wider economic benefit.
Matthew Fell, chief UK policy director at the CBI, said: “Prior to the outbreak of covid-19, businesses welcomed the government’s commitment to deliver an ‘infrastructure revolution’ and interpreted it as a clear sign that the government was serious about delivering on its levelling-up agenda.
“While the UK government’s commitment to delivering infrastructure remains undeterred, the country’s fiscal position has substantially worsened. In this context, the private sector now has an even more important role to play in helping to bridge the funding gap needed to deliver the government’s vision for UK infrastructure.
“To support its ambitious infrastructure agenda and provide better connectivity, at good value for taxpayers, the government must reinvigorate the UK infrastructure market tackling concerns about regulation and a lack of clarity about investment opportunities.
“The government must commit to an approach that gives confidence to investors and capitalises on the attributes of businesses and public sector establishing itself once again as a world class destination for investment.”
Guy Thompson, director of environmental futures, Wessex Water added: “As a private company delivering essential services, Wessex Water welcomes this timely paper from the CBI.
“We need to invest more in essential infrastructure and to take a long-term view on that investment. The focus on a green economic recovery from the Covid crisis presents an opportunity to build infrastructure that is more resilient in the face of climate change and other environmental pressures.”