The impact of infrastructure on jobs, regeneration and the economy should not be underestimated. For every pound spent on construction, it has been calculated that our economy benefits to the tune of £2.84, and there are even higher returns on infrastructure projects. Over the next parliament, the economic and commercial environment that has been a stimulus for infrastructure needs to be sustained, while bold decisions should also be made to further drive delivery.
Government initiatives such as the National Infrastructure Plan (NIP) have greatly contributed to a climate that helps get Britain building. As the NIP has evolved, it has become more programme-orientated in its approach. This has helped the main players in a number of industries and, critically, small and medium-sized enterprises (SMEs), make more informed decisions so that technical and specialist skills can be aligned with demand. For the next Parliament, the same level of clarity will need to be applied to delivery – especially around skills – to help industry recruit, develop and maintain the talent required to secure the major projects of the future.
The types of projects outlined in the NIP provide a platform not only for delivery of UK projects, but in the longer term for export opportunities and the next government could encourage partnerships to deliver these big projects. Without such cooperation, British firms could lose out to international consortia and be reduced to second-tier roles. As plans for infrastructure investment around the world gather pace, our country’s export potential could be eroded at the very time British capacity matures.
Improved insight into the infrastructure pipeline encourages investment from overseas and from the UK private sector. Government initiatives such as the UK Guarantee Scheme have helped kick-start a number of projects, including the Mersey Gateway, but to ensure the impetus of this programme and the importance to our economy are not lost, further support will need to be given for new financing and delivery models.
The nascent return of municipal bonds is a welcome move, but to be successful, investment risks must be adequately spread. It is therefore essential that bonds relate to a pipeline of developments that investors and industry believe will happen. This confidence helps secure financial terms superior to those available through project finance. A logical next step would be for government infrastructure programmes to be ‘packaged’ with funding streams and clear delivery plans, to help achieve a sustainable supply of the private sector expertise and skills required.
If the next government is serious about securing an infrastructure legacy, the construction industry and associated business must be supported to think creatively and to form joint ventures and partnerships capable of leading delivery. Government leadership and support will help British firms to think big and avoid missing out on valuable export opportunities. The potential is already apparent; the time to act is early in the next parliament.