Why the plan to build up Britain is a ‘no-brainer’

IT’S good for growth, good for the public, and in urgent need of investment – you’d be forgiven for thinking that putting money into infrastructure is a no-brainer for the Government.

Investing in it creates a wealth of construction jobs in the short-term, while in the long-term it makes doing business easier, ensuring that time or money isn’t wasted in traffic jams or slow internet connections.

That’s not to mention the lure of a country with decent infrastructure as a destination for investment.

And for the most part, there is a real appetite for new building projects from local communities, whether it be a train station, a bypass to reduce congestion on local roads, or superfast broadband being rolled out across the country.

This is because infrastructure in the UK is patchy. The Government reckons the investment needed stands at around £250bn over the next five years and beyond. To put our infrastructure in global perspective, we are rated 28th by the World Economic Forum – that’s behind Barbados and Oman. We also rank well down behind many of our international competitors, with France 4th and Germany 9th. But with current pressure on the Government’s balance sheet, and the need to reduce the budget deficit, it hasn’t been possible for the public sector to fund infrastructure directly. That means the private sector has to step up to fill the gap.

Fortunately, the returns that infrastructure can offer investors mean that this type of investment is a good and safe bet. Its secure, long-term returns offer stability, which is just what some investors are after.

The problem is the buzz around infrastructure is not matched by delivery.

Businesses across the country have told us that credit availability for infrastructure investment is not what it used to be. Like the Government, banks have had to shore up their balance sheets too, but this has meant that long-term lending has been limited.

That’s why we have been calling on the Government to take decisive action to kick-start delivery.

This week, it made a critical intervention in the market by freeing up finance for projects.

The Government will be offering guarantees on parts of the finance for infrastructure projects, so that lenders have the confidence to lend, and we get spades in the ground.

LET’S be clear, this is a big step in the right direction. The Government is not going headlong into infrastructure projects with taxpayers’ money, nor sitting back and letting it crumble, rather it is using its balance sheet smartly. This will boost the confidence of infrastructure developers and construction.

So it is good work from the Government. It has recognised just how important infrastructure is, and has oiled the wheels of private investment.

Let’s hope this is a sea-change.

With real confidence in the infrastructure sector, businesses will be looking forward to the biggest projects, and for decisions to be made on energy and aviation.

As always, it is now about getting the detail right, so that in 12 months we will be applauding the delivery as well as the idea.