UK spending review: infrastructure plans ‘depend on incentives for private sector’

On Wednesday, UK chancellor Rachel Reeves made a series of funding commitments concerning infrastructure across sectors such as energy, health, transport, education, justice and technology.

The public funding commitments include: more than £14 billion of funding for the new Sizewell C nuclear power plant; £30bn over the next five years to enable maintenance and repair of the NHS estate; a £15.6bn settlement – and further grant funding – to support transport investment in UK cities and regions; £24bn of capital funding for roads improvement and maintenance works; £6bn in total to support delivery of the TransPennine rail route upgrade and the East-West Rail link between Oxford and Cambridge; and around £2.4bn per year investment in rebuilding schools – with a further increase in the yearly school maintenance budget.

Other funding pledges include: £7bn of funding over the next five years to increase prison capacity; £9.4bn over the next five years to support the development of carbon capture use and storage (CCUS) facilities; £1.9 bn for digital infrastructure, to ensure wider access to and speedier broadband connectivity; and the establishment of a new local growth fund and a new growth mission fund, both of which are designed to support local authorities to invest in local projects.

Next week, the government is expected to provide further details of its infrastructure plans via a new long-term infrastructure strategy and publication of a pipeline of projects.

Stephen Tobin of Pinsent Masons said: “Public funding alone cannot meet the scale of investment needed for the critical infrastructure of the UK – from transport and housing to energy and digital connectivity.”

“The UK government faces a critical challenge: how to attract private investment into infrastructure without discouraging that investment through dragging it onto a political sports pitch. Investments in infrastructure are long-term, delivered across political cycles and paid for by the current and future generation of taxpayers. It is apparent that the UK is willing to invest for its future generations, and that the private sector has a strong part to play but whether they can be expected to be fairly rewarded for doing so is not yet quite so clear. The next phase of UK infrastructure policy will depend on getting that balance right,” he said.

Earlier this week, Tobin and other experts at Pinsent Masons highlighted the political and economic constraints on the government as it explores its infrastructure financing options.