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Viewpoint: Nelson Ogunshakin

Infrastructure development in this country faces three stark realities. There will be less public money to invest as the government concentrates on addressing the budget deficit.
Secondly, investor confidence in the private sector is still fragile. It will continue to be difficult to persuade investors to support any but the lowest risk developments.

Thirdly - as a direct result of the previous two points - infrastructure developers will be under pressure to maximise value for any investment they can get. During the next few years the expectation will be that the industry must deliver “more for less”.

Further indicators of the future for UK infrastructure were expected to emerge from this week’s emergency Budget and are expected from the Comprehensive Spending Review in October.

In the meantime, industry must make a robust case for what - to us - is self-evident: that investment in infrastructure is investment in economic growth.

Yet, we must be mindful of the economic climate in which we operate. Self-serving proposals to develop mega-projects and large scale programmes will likely fall on deaf ears.

What the UK needs most to support the economy are quick wins that deliver maximum benefit for minimum outlay. The focus must therefore be on the everyday, not the iconic.

In the short term, the UK should focus on maintaining and enhancing existing networks. Scaling back maintenance of road, rail, water and electricity networks would risk storing up greater and more costly issues in the future.

“We must set the wheels in motion now to avoid an infrastructure crunch in the future”

On our road network there are long-standing and well-known bottlenecks, particularly on regional roads, that are holding back economic performance. The Highways Agency has identified a number of key regional schemes including the A3 at Hindhead and A421 at Bedford; on a local scale there may be many more. Addressing issues such as these must be a priority.

Our conventional rail networks are also vital to the UK’s economic health. The Easter rail strike, for example, cost the economy £600M per day . Addressing issues of reliability and efficiency will help to ensure that the existing infrastructure can respond to demand over the coming years.

Likewise, reinforcement of the electricity grid would give confidence to energy generators and their investors to push ahead with new generating capacity.

The UK still faces longer term challenges of energy provision, housing and transport capacity. The recovery will increase demand. This means we must set the wheels in motion now to avoid an infrastructure crunch in the future.

That is why we also need to trial innovative means of bringing private investment into infrastructure. Mechanisms such as infrastructure investment trusts (IIT), infrastructure gilts and greater use of tax increment financing - all of which the Association for Consultancy and Engineering has proposed - could be part of the longer term picture.

Such innovative ideas must be allowed to develop sooner rather than later. Otherwise, we risk yet another damaging hiatus in infrastructure development, hampering the recovery and preventing UK plc from trading to its potential.

  • Nelson Ogunshakin is chief executive of the Association for Consultancy and Engineering

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