• 26 March 2019

Is it time to de-politicise UK infrastructure investment?

The United Kingdom’s (UK) infrastructure plays a vital role in our daily lives. However, with decades of underinvestment, maintaining the existing assets and investing in new infrastructure to enable growth and adapting to our changing patterns of work presents a significant challenge to the sector.

Following the recent government infrastructure budget announcement, we spoke to Neil Humphrey (Chief Operating Officer of Waterman Infrastructure & Environment) to get his insight into what the future holds for the nation’s infrastructure.

Neil says; “The UK’s requirements from its infrastructure are becoming increasingly complex. By 2026 the population is predicted to increase to 69.2 million, hitting 75 million by 2050. Coupled with disruptive technologies changing how we interface with our infrastructure and the challenges associated with climate change, just maintaining the existing infrastructure as a minimum is no longer an option, we have to do more.”

Set against a backdrop of considerable political uncertainty surrounding BREXIT however, the European Investment Bank drastically reduced its funding for infrastructure by 72% to just €1.8 bn in 2017, having previously invested €31.3 bn in the UK between 2012 – 2016.

“The infrastructure sector is now experiencing a much-needed resurgence following recent investment. However, the industry is facing a major challenge to deliver what is required, with strategic projects remaining mired in controversy over cost, time delays and political repositioning, and future uncertainty on how we fund the much-needed future investment.”

In light of historic underinvestment, the UK is having to focus efforts on maintaining existing assets. Neil says; “Highways England is upgrading the capacity of the existing strategic road network, improving road maintenance rather than the creation of new roads. The cost of repairing the UK’s 24,000 miles of local roads is £5 bn alone over 10 years.”

“The previous Road Investment Strategy, running to 2020, had £15.2 bn of funding committed to it, and all eyes will be on the next funding period. The requirements for our roads are changing and it’s clear that our industry needs to embrace emerging technologies to drive value in these critical assets.”

“As for the rail sector,” Neil continues; “in 2018 the Government announced a ‘root and branch’ review of how the rail sector operates, to equalise the disparity between private sector investment and Government support, currently 18% and 82% of investment respectively. Over £40 bn of spending is identified between 2017 and 2021, with much of this linked to Crossrail and HS2, and a further £49 bn identified beyond 2021. This is intended to support schemes improving connectivity between northern cities, such as TRU.”

Elsewhere, the water sector will be faced with the combined challenges of greater demand through population growth, coupled with the risks attached to extreme weather events and drought. Neil says; “The water companies deliver their investment plans through five-year asset management periods, and there is an increasing need for a longer-term strategic investment programme to be implemented to tackle these challenges, adopting alternative funding models. Thames Tideway is a good example of what can be achieved when alternative funding models are embraced.”

In November 2018 Government Ministers reiterated their commitment to developing major infrastructure, unveiling £600 bn worth of proposed investment over the next decade, including a renewed focus on implementing more modern approaches to construction. The Manufacturing Technology Centre (MTC) in Coventry, where Waterman have been involved in the development of the MTC and the wider Ansty Park since 2007, is one example of this kind of project where the Government and private sector came together to develop innovative solutions to meet today’s challenges.

Considering this, Neil says; “To drive-forward this type of investment we need to move strategic decision-making to a longer-term perspective, which does not marry well with our relatively short-term parliamentary cycle.”

“The answer may be to increase the role of the National Infrastructure Commission, or create a UK Investment Bank drawing from the underutilised UK Guarantee Scheme, as recommended by the ICE. What is clear is that the UK must continue investing in, and not just maintaining, it’s infrastructure. Almost everything the UK hopes to achieve in the future will be built around our strategic infrastructure network.”

Read the latest edition of our Waterman Times here.

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