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04/11/2014

Political rhetoric discourages infrastructure investment, concludes survey

Words: Laura Edgar
Businesses feel motorways are getting worse

Businesses are urging a new approach in order for the UK to address its long-term infrastructure challenges.

Although improvements have been made to the infrastructure policy during this Coalition parliament, the political uncertainty present in the UK means it is still unable to deliver the upgrades needed. This is the message from the latest CBI/URS Infrastructure Survey of 443 senior business leaders.

Taking the long view: A new approach to infrastructure (pdf) reveals that in competitive areas of energy and transport, 67 per cent and 57 per cent of businesses respectively expected infrastructure to worsen in the next five years, and that it is below that of Australasia, North America and Europe.

The majority of businesses, 96 per cent, believe that political uncertainty discourages potential investors, with 93 per cent identifying political rhetoric as damaging to markets. Additionally, all infrastructure

The CBI’s infrastructure policy priorities include:

1.    Establish an independent body to determine infrastructure needs and how they can be met.

2.    Boost investment in infrastructure by introducing capital allowance for structures and buildings.

3.    Ensure that energy efficiency is a priority and implement every element of Electricity Market Reform to secure investment in the power sector.

4.    Commit to the implementation of the Airports Commission recommendations.

providers and almost all businesses feel that the case for High Speed Rail 2 would have been easier if it was part of a long-term plan while more than half commented on the worsening of motorways.

On the other hand, more than two thirds see policies such as the UK Guarantee Scheme and growth planning reforms as positive developments.

Katja Hall, Confederation of British Industry (CBI) deputy director general, said: “Progress on infrastructure has been a case of two steps forward and three steps back for far too long. While the policy environment has improved, businesses still don’t see upgrades to mission-critical parts of our infrastructure on the ground in practice – and don’t expect to anytime soon. 

“Politicians are too often seen as ducking the big, politically difficult questions looming large on businesses’ risk register, like runway capacity and long-term road funding, rather than grasping the nettle.

“Where hard decisions have been taken on issues like energy, populist political rhetoric threatens to send us backwards. Just recently National Grid warned that spare capacity margins are at the lowest level in seven years, so building up investor confidence couldn’t be more important.”

To tackle the negativity, the survey reveals that 89 per cent of businesses are in support of an independent infrastructure commission to determine what the UK needs. Furthermore, they want to see bold pledges in party manifestos for next year's election, including the backing of rail franchising and Network Rail’s investment plans, as well as road funding reform alongside more private investment.

John Horgan, URS managing director, Europe, Middle East, Africa and India, explained: “Separating short-term politics from infrastructure decision-making would help end the stop-start investment that has so often stalled progress in the past. A long-term strategy with longevity of funding would give industry the confidence to recruit and maintain the skills required to deliver the projects the UK so urgently needs.”

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