The financial strain of Covid-19 must not be allowed to derail infrastructure spending ambitions, says the Confederation of British Industry (CBI)
Private sector investment can be a major driver of the UK’s ‘infrastructure revolution’, says the CBI, at a time when public purses have been stretched by Covid-19 support measures.
The pandemic has placed an enormous and unexpected burden upon the UK economy.
However, CBI says the financial strain resulting from Covid-19 must not be allowed to derail infrastructure spending ambitions.
‘Investing in infrastructure’, a new paper released today by the CBI, highlights the critical role private finance can play in delivering on these promises.
The paper lays out a series of recommendations to Government on how to attract increased private sector investment to deliver infrastructure.
Key among those 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 in focusing on crowding 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 and reforming the National Infrastructure and Construction Pipeline to boost confidence.
‘Bridge the funding gap’
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.”
Stimulate economic growth
Richard Threlfall, global head of infrastructure at KPMG International, commented: “Carefully prioritised infrastructure investment will stimulate economic growth and help create a fairer, more resilient and sustainable economy.
“But with constrained public finances, now more than ever, we need to attract private finance, both from the UK and from inward investment.
“I welcome the powerful set of recommendations in this report, which if enacted would really help the UK to build back better.”
Stuart McMillan, partner at Burges Salmon LLP, added: “Attracting private capital and funding will be crucial in delivering the UK Government’s vision of an ‘infrastructure revolution’.
“Ensuring that the UK has a balanced regulatory environment, which offers clarity to investors, has never been more important in attracting private finance to the UK’s infrastructure market.”