Second National Infrastructure Plan should focus on private funding, says Foulkes
The government’s latest National Infrastructure Plan (NIP2), must clearly set out how to attract £200bn in private funding for UK transport and energy projects, the ICE said last week.
The first NIP, published in October last year, acknowledged major failings in the UK’s attitudes to developing new infrastructure.
It said £200bn should be invested in infrastructure between now and 2015, and that 70% of this money should be from private finance.
“NIP2 must not be a list of possible publicly funded projects. It must be a focused plan”
Tom Foulkes, ICE
But ICE director general Tom Foulkes said ministers had failed to anticipate the extent to which private money will be needed. He urged them to produce a clear plan to engage with investors.
The ICE is backing the use of infrastructure investment to revive the UK economy.
“It is vital that we get this right - NIP2 must not be a long list of possible publicly funded infrastructure projects stretching into the far future, or a cross-Whitehall compendium of initiatives. It must be a tightly focused plan of action,” said Foulkes.
The first NIP was published last year as a government manifesto for securing the UK’s future energy supply, adapting to climate change and using infrastructure to drive the UK’s economic growth.
The NIP came with a promise of a second, more detailed plan to be published this autumn, setting out how this could be achieved.
Foulkes continued: “The government has rightly identified encouraging greater investment in infrastructure as a priority for the second phase of its growth review, but it is now time to put some weight behind that.”
Since the publication of the first NIP, steps have been made to encourage private investment.
These have included moves to create a Green Investment Bank (GIB) and to fast track the planning approval process for nationally significant infrastructure projects, which the ICE has welcomed.
But when plans for the bank were first announced, the House of Commons Environmental Audit Committee warned of the consequences of ignoring “the number of market failures and investment barriers that require urgent remedial action”.
It also warned that the bank should not just be a conduit for public spending.
“The GIB must not be just another fund to disburse government money, but a bank able to raise its own finance, fill a gap in the market for government-backed bonds, and offer a range of commercially-driven interventions, such as loans, equity and risk-reduction finance,” it said.
- To view the ICE’s recommendations in full visit www.ice.org.uk/nip2
NIP so far
In recent years, concerns have repeatedly been raised by UK business abut the state of the UK’s infrastructure. The World Economic Forum’s most recent global competiveness survey ranked the UK 33rd in the world for the quality of its infrastructure.
The first NIP was scathing in its assessment of the current state of UK infrastructure. “For several decades the UK’s approach to infrastructure investment has in general been timid, uncoordinated, incremental, wasteful in its procurement and insufficiently targeted to supporting balanced and sustainable growth,” it said.
The publication of the NIP confirmed the coalition’s focus on infrastructure as a key part of bringing the UK back to positive growth, but its critics warned that its recommendations were unlikely to be implemented.
Since them, plans for a Green Investment Bank have been announced, but the bank has yet to start functioning. The bank is not expected to have powers to borrow money until 2015 at the earliest (NCE 31 March).