Out-Law News | 05 Dec 2013 | 10:05 am | 3 min. read
However Kate Orviss of Pinsent Masons, the law firm behind Out-Law.com, said that questions remained over whether the document would deliver the "pipeline" of projects needed to provide certainty about upcoming work to the industry. The document contained little in the way of new announcements, she said.
"This incarnation of the NIP deserves an 'A' for effort but is more a 'B-' for achievement, as whilst there is more detail on the 40 'Priority Schemes' it is largely a restatement," she said. "There are some new announcements which sound positive but lack the detail industry craves," she said.
"Much was made of the attractiveness of the UK as an infrastructure investment destination. The NIP even sets out in clear detail the £15 billion on inward investment in UK infrastructure since May 2010. However, there is a clear distinction between investing in established infrastructure assets or owners of assets and investing in developing and delivering new infrastructure, where the potential risk is much greater. Even the new improved NIP 2013 hasn't solved that conundrum yet, and it is new infrastructure that the UK needs," she said.
The updated NIP sets out the Government's investment priorities up to 2030; and includes a list of 40 'Priority Schemes' in the energy, transport, flood defence, waste, water and communications sectors. There are a total of 646 projects and programmes in the updated pipeline, of which 291 are already under construction; although whether or not any project will proceed will be determined by the market.
The Government allocated £100bn to capital spending on infrastructure as part of the 2013 Spending Round. Alongside the NIP, it plans to provide a further £50 million for a full redevelopment of the railway station at Gatwick Airport and fund newly-announced improvements to the A50 around Uttoxeter. It has also now confirmed that there will be no tolling on the planned upgrade of the A14 between Cambridge and Huntington.
Alongside planned projects, the updated NIP proposes new initiatives to speed up the delivery of the highest priority projects. A dedicated 'hot-desk' will be established within Treasury department Infrastructure UK as a point of contact for the owners of those projects, while a new Major Infrastructure Tracking unit will be set up to track the progress of each of the Priority Schemes.
At the same time, six major insurers have announced plans to collectively invest £25bn in UK infrastructure over the next five years. L&G, Prudential, Aviva, Standard Life, Friends Life and Scottish Widows have not traditionally invested in infrastructure, but are now freer to do so following changes to the upcoming Solvency II risk management framework. Recently-agreed amendments to the final wording of the forthcoming legislation will not prevent insurers from making longer-term investments.
However, infrastructure expert Kate Orviss said that the details of how the insurers would invest, and in which projects, were not yet clear.
"The £25bn committed from the insurance companies is a welcome boost," she said. "However, there is uncertainty on how much of the £25bn will be used on the NIP - furthermore, what remains committed to new-build infrastructure is unclear."
"Also, there is no guarantee that the same concerns which have hindered the development of the Pension Investment Platform, where only £1bn out of the planned £20bn was raised, will not hinder investment from insurance companies – will they be willing to take on the construction risk, which seemed to be a major sticking point with the PIP," she said.
Chief Secretary to the Treasury Danny Alexander also announced that the Government was doubling its target for the sale of corporate and financial assets from £10bn to £20bn between 2014 and 2020. This could include its share of Eurostar. The Government will also consider how to bring private capital into the publicly-funded Green Investment Bank, allowing it to access more funding to lend to private sector environmental preservation and improvement projects.
"The announcement that six major insurers will invest £25bn over the next five years is a massive vote of confidence in the UK economy," he said. "It supports the wider £100bn public investment to rebuild Britain over the next seven years that I announced at the Spending Round 2013."
"This is great news for the people of the UK because after years of neglect, the UK's energy, road, rail, flood defence, communications and water infrastructure needs renewal. It will boost the UK economy creating jobs and making it easier to do business. It will also make the UK a better place to live for everyone who calls it their home," he said.