Infrastructure funding debate at risk of going around in circles, says Pinsent Masons

16 Jan 2013 | 03:41 pm | 1 min. read

Graham Robinson, infrastructure expert at Pinsent Masons, comments on the Government's policy on funding new infrastructure projects in the UK and the findings from the National Audit Office (NAO):

"Let's remind ourselves that almost 70 percent of Britain's infrastructure is already privately funded today, but if we are to address the need to upgrade essential infrastructure to compete effectively for business with the growing emerging markets then this will add additional pressure on public finances.

"Moving more of Britain's publicly funded infrastructure assets into a new regulated model that attracts private investors from around the world is one answer as investment of around £400bn in new infrastructure assets is needed by 2020.

"Water is a regulated sector that attracts significant investment from around the world and is widely seen as a successful model after years of underinvestment.

"The motorway and trunk roads network is a sector where investment has been cut as it is a publicly funded asset and the government doesn't have the money to invest, yet Britain's roads need significant investment over the coming decade.

"Moving the UK trunk roads network into a Regulated Asset Based (RAB) model to attract private investment is something that still needs to happen and the Government should be looking at this as RAB models have the ability to attract large amounts of private capital into infrastructure through a transparent and consistent mechanism that reduces investor risk and places a cap on consumer prices.

"Investment in infrastructure in the UK has fallen by 11.3% year-on-year as public funding cuts have been implemented.

"As we have seen, there is significant capacity in our beleaguered construction sector available to build the infrastructure that Britain needs, but the government needs to find new ways of attracting private investment into a wider range of infrastructure assets.

"The construction industry has been calling for more clarity on the National Infrastructure Plan and there is no doubt that key infrastructure is in need of modernisation not only for the UK's business competitiveness but for the nation's next generation.

"Looking at this more widely, the financial crisis has meant the Government is unable to fund the growing need for new infrastructure projects for Britain to compete for valuable business from fast growing emerging markets. Ultimately, it is the private sector that needs reassuring because without it Britain will continue going around in circles and if we do not invest in infrastructure then Britain's economy could stagnate."

-ENDS-

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