Out-Law News 3 min. read

"Bold action" from Government needed on transport investment says lobby group

The Government needs to take "bold action" on a number of priority transport projects that have the potential to boost business growth across the UK, according to the British Chambers of Commerce (BCC).

The lobby group said that there had been "little or no progress" on eight of the 13 road, rail and aviation projects (1-page / 314KB PDF) it had highlighted as "business critical" before the last election. It called on the Government to "transform its rhetoric into reality" in the second half of this Parliament.

BCC director of policy Dr Adam Marshall said that transport projects were "critical to business growth".

"This kind of investment is insulated from global uncertainty, and it creates short-term confidence, jobs in the medium term, and improves the UK's competitiveness in the long term," he said. "Ministers must use all the powers at their disposal to kick-start these law projects. In some cases, that will mean using the government's balance sheet to unlock private funding, and in others, it will mean using planning powers to overcome objections and speed the process of construction."

The BCC said that of the priority projects it identified in 2010, only three were currently under construction and working towards a firm delivery date. These included motorway improvements near Birmingham, due to be completed in Spring 2014; a replacement for the deteriorating Forth Road Bridge and upgrades to the surrounding roads for 2016; and London's Crossrail project, which despite delays is expected to be fully operational in 2019.

However 18 proposed projects to improve the rail network in the North of England, known as the 'Northern Hub', were still in the "very early" planning stages, and "more concrete steps" were needed on the Government's commitment to widen the A453 in the East Midlands, with construction due to start next year. Six more projects were on hold due to a lack of funding or planning permission, or were merely "under discussion", while the much-needed Heathrow Third Runway scheme and improvements to the A14 were both cancelled after the election. Although the A14 project has since been reinstated, work is not now due to begin until 2018.

Infrastructure law expert Graham Robinson of Pinsent Masons, the law firm behind Out-Law.com, said that lack of public investment had hit much-needed spending on new infrastructure, particularly roads. The UK has fallen to 24th in the World Economic Forum's rankings of overall quality of infrastructure, "well below" many other European countries, he said.

"In the last 12 months, output by construction firms in infrastructure has dropped by over 13% with further pain expected, as the public sector spending freeze continues," he said. "On the eve of the Government publishing its third National Infrastructure Plan, alongside the Chancellor's Autumn Statement on 5 December, the question of how that plan will be funded and what that plan will contain remains largely unanswered."

He called on the Government to implement "bolder policies" in order to attract institutional funding, such as that from pension funds, into new infrastructure assets.

"Funding for the new N33 in the Netherlands, at a cost of EUR650 million, has just been completed with combined funding by banks and pension funds," he said. "The difference is the crucial support from government in making index-linked returns available to pension funds."

Another alternative could be to transfer the UK's motorway and trunk roads network into a regulated asset base (RAB) model, to be overseen by a national 'roads regulator', he said. Introduced on privatisation of the utilities, the RAB model sees a Government-appointed independent regulator take control of an asset and grant access in exchange for a fee.

Dr Marshall of the BCC also commented that progress on projects which had already received Government approval was "typically slow" and often ended up "mired in the planning stages".

In a speech to the CBI annual conference last week, Prime Minister David Cameron said that the Government intended to "cut the time it takes to upgrade our roads in half" by "[dismantling] some of the procedures that have been slowing us down". Since his comments were made, Transport Secretary Patrick McLoughlin has announced that planned upgrades to three roads would be "accelerated" while new ways of working including pre-assembling work off-site and moving toward a 24-hour operation on projects should in future "see lanes added to motorways in up to half the time it normally takes".

However, transport expert Jon Hart of Pinsent Masons warned that although the intention was laudable, "the same issue remains as to creating the pipeline of deals to give substance" to speedier procurement timetables.

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