With the launch of the National Infrastructure Delivery Plan, the government has taken a major step towards putting British infrastructure back on the map.
From our railways to our roads, we now have in place a clear timetable for the delivery of vital infrastructure projects. We cannot underestimate the security this will bring to investors, and I have every confidence that the National Infrastructure Delivery Plan will drive growth in a sector vital to UK plc.
“As a word of caution, we are surprised that housing has been tied in with an infrastructure plan”
For too long, the future of Britain’s biggest infrastructure projects have been kicked into the long grass, and we have lacked clear direction around timelines for crucial projects such as High Speed 3 and Crossrail 2.
But now, that uncertainty looks set to end. We have been calling for publication of the plan since last May, in our pre-election Property in Politics paper, and it is a hugely welcome – if long-awaited – development.
As a word of caution, we are surprised that housing has been tied in with an infrastructure plan. These are both important and very separate issues.
The housing crisis, be it the delivery of new social housing for affordable rents or the construction of homes for private ownership, should be afforded a plan in its own right if the government truly wants to prove its credentials in this field.
Moreover, when it comes to infrastructure, we cannot forget the central importance of encouraging private investment.
Our data suggests tender prices for infrastructure projects are expected to rise by around 30 per cent over the next five years. In addition, we don’t have the investment needed to cover the existing £400bn infrastructure funding gap.
While money allocated so far from the Treasury and local government pension pots will help, we need to go much further.
“Of course, the elephant in the room is the future hub airport”
It is clear that we need to attract greater levels of foreign direct investment, but the chancellor is short-sighted if he believes that Chinese cash alone will address our investment needs.
We would recommend that the Investment Industry Group look at an assessment modelled on the Montague Review of real estate investment trusts, which ultimately broke down many of the barriers blocking investment in this sector.
The new NIDP does recognise the immediate value and locational investment benefits of smaller regional projects.
In the coming months we would like to see the government working with Transport for the North and devolved cities on the publication of an ‘infrastructure investment catalogue’ – a tool that would target potential investors, such as challenger banks and pensions funds, encouraging them to view the opportunities available to finance smaller but equally important ventures, allowing a truly rounded infrastructure strategy.
Of course, the elephant in the room is the future hub airport.
We would be naïve to assume that we will see any announcement ahead of the London mayoral elections, but it is nonetheless surprising that a National Infrastructure Delivery Plan avoids mention of the biggest issue facing British infrastructure today.
The next step for government must be to come to a clear decision around the future hub, and ensure our aerospace network continues to be fit to allow us to grow as a global economy.
Jeremy Blackburn is head of policy at RICS