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Autumn Statement 2011: Industry reaction

Industry responses to chancellor George Osborne’s Autumn Statement have been overwhelmingly positive so far.

ICE director general Tom Foulkes said the government’s aspirations on how to finance infrastructure in the longer term through a range of models and working with the pensions industry to leverage £20bn, are “very encouraging”. “Going forwards there must also be regular, high profile, public reporting on the progress of the infrastructure plan to ensure goals are met and the plan remains up to date,” he added. “The commitment to report against performance measures for each network in an annual ‘state of the infrastructure’ report is a real step forward.  However, to retain confidence and create a platform for continuous dialogue between industry, investors and government there is a strong case for a National Infrastructure Forum bringing together the key players who will be involved in implementing the plan. Clearly government has taken on board the case made by ICE and others for prioritisation of capital expenditure for infrastructure investment, despite difficult economic circumstances.”

Association for Consultancy and Engineering chief executive Nelson Ogunshakin said the country is facing a £434bn infrastructure shortfall by 2020 and is now ranked 28th in the world, while the nearest competitor France is ranked third. “We are very pleased to see the announcements through National Infrastructure Plan 2 further strengthen infrastructure activity”, he said and added that “some” certainty over the future would be generated via the £5bn to be made available in the next spending period along with the list of 500 pipeline projects for the next 10 years and beyond.

The Chartered Institute of Highways and Transportation said the initial project list aimed at improving the Strategic Road Network outlined in the National Infrastructure Plan was “encouraging” but added that if the UK is to gain the full economic benefit “this must be extended”. Chief executive Sue Percy added that there were many difficult issues to be addressed before the concept of accessing pension funds for infrastructure becomes a reality. “It is unclear whether there has been a clear commitment to the provision of additional funding to take forward key projects in an accelerated programme,” she said.

Consultant Ramboll director Surinder Mann said that while investment in roads and bridges was good, rail and sustainable energy are greener and the latter was “sadly lacking” in the Statement. However, Mann added that the Government “seems to have finally woken up to the importance of the real economy; not London and not finance centred, but national and industrial”.

Consultant Atkins chief executive Uwe Krueger said that the firm “applauds” the chancellor for “setting the framework” that will entice investment into new schemes. Krueger added that the engineering community must now provide clarity on costs, delivery and payback to promote the case with the financial sector. “The UK has world class engineering and design skills and after a long recession is hungry to deliver new rail-lines, power facilities and airport capacity in a cost-efficient and highly effective way”.

Programme management consultant Turner & Townsend managing director of infrastructure Murray Rowden said that the government’s plan to tap into UK pension funds was a “logical and tested way of keeping much of the cost off the government’s balance sheet” and added that “it should be an easy sell”. “From the pension funds’ perspective, the right projects can be very appealing – as they provide a long-term, steady income stream and low risk,” said Rowden. “But the smaller projects will provide a tougher challenge, as investors in these will often want to see quicker returns in return for higher risk.

Business lobby group CBI director general John Cridland said it “particularly welcomed” the new emphasis on caital spending but added that “equally important” for jobs and growth is the recognition that the UK’s “energy-intensive users” need help as a result of the unilateral increases in manufacturing energy costs from the carbon floor price and electricity market reform.

Renewable Energy Association chief executive Gaynor Hartnell said that there was “certainly no evidence of the ‘ruthless’ focus on renewable energy called for by [deputy rime minister] Nick Clegg” earlier this year adding that in fact policy uncertainty across renewables was “draining investor confidence”.

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