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Andrew Whiffin

Viewpoint: Investment needed

One hundred and fifty years ago this January something happened in London that was to change the shape of intra-city transport across the world for ever: the opening of the London Underground. It was a culmination of cutting edge engineering and infrastructure technology that would help confirm Britain’s place in these fields as an innovator and world leader.

If we fast forward to the present day, is the country still to be viewed in the same light? According to a panel of experts assembled by auditor KPMG it is.

In a report it published last summer that claims to be “a showcase of one hundred urban infrastructure projects that embody the spirit of innovation and stand as an inspiration to infrastructure participants and city leaders around the world”, Britain managed to get seven projects on the final list, more than France, Germany and Italy combined.

Mammoth projects such as the Thames Tideway Tunnel are included on the list.

It is an ambitious plan to bore a sewer underneath the route of the Thames through central London.

The tunnel will put an end to the tonnes of unprocessed waste that flows into the Thames from the existing Victorian infrastructure, ultimately leading to long term environmental benefits. The estimated cost of the project has escalated since the initial idea was first penned, from £1.7bn in 2006 to £4.1bn today. But if all goes according to plan work is due to begin in 2015.

Another sizeable project on the list is the Mersey Gateway, a new structure planned to ease traffic congestion on the existing Silver Jubilee Bridge in Cheshire.

These projects are both exceptional and impressive in their undertaking but there is a risk that projects of this scope are becoming a thing of the past.

Glenigan research shows that 2012 was the worst post-recession year for major (£100M plus) projects starting in the UK.

Slightly under £9bn of major projects began last year, according to the research. It represents the third successive year of decline in this measure.

The increasing scarcity of projects of this scope could result in the UK economy losing out in terms of growth and competitiveness in years to come.

The initial investment necessitated by their construction provides a direct multiplier effect and, in the case of projects of this size, a considerable boost to the wider economy.

Longer term benefits can also be substantial; the Tube has served the capital’s transport needs for 150 years, and investment in new transport infrastructure such as high speed rail and increased airport capacity will help safeguard the UK economy well into the 21st century.

Some hope is at hand; the revival of the PFI and the efforts to get pension funds into infrastructure are likely to boost the number of major projects in the coming year.

However, further action is still required. Modernisation of the UK’s ailing energy infrastructure resulting from, decisions in areas like nuclear power investment is needed to support future economic growth and prosperity.

  • Andrew Whiffin is an economist at construction intelligence firm Glenigan

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