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Government to select 40 priority infrastructure projects

The government will select 40 major infrastructure projects, including schemes like Crossrail and Great Western Electrification, to be given a new priority status to ensure speedy investment and development.

Deputy Prime Minister Nick Clegg delivered a speech today to the London School of Economics in which he claimed failure to deliver major infrastructure projects on time and on budget is a perennial problem in the UK.

He said: “We may be one of the best countries to set up and run a business. But we rank 28th in the world for infrastructure. A nation that once led the way in engineering and construction… we rely on water and waste networks from the 19th Century.

“Our railways are a throwback to the 1970s. We have some of the most congested roads in Europe. While our competitors continue to invest in cutting edge infrastructure.”

Mr Clegg said that Chief Secretary Danny Alexander will demand that departments report back to him through the Autumn of their spending priorities to ensure that infrastructure funding is being spent as a priority.

Transport secretary Philip Hammond will tomorrow set out plans to give communities more power over the funding and decisions for local transport schemes.

CECA director of external affairs Alasdair Reisner said the speech was a welcome sign that the government appreciates the wider benefits of investing in communications and transport networks.

He added: “But while this speech is welcome, with figures just a fortnight ago showing near-calamitous order figures for the construction industry as a whole, a focus on haste is now required.

“Firms facing collapsing order books and margins squeezed between falling tender prices and soaring costs cannot afford to wait much longer for new work. So what is crucial is that these welcome words turn quickly into shovels on the ground. Only then will we see any return of confidence to the construction sector, and hopefully the broader economy, allowing the much-hyped private sector-led recovery to really gain pace.”

Institution of Civil Engineers director general Tom Foulkes welcomed the speech. However he warned that the imminent second edition of the National Infrastructure Plan will be the real show of the government’s commitment to infrastructure.

“A plan that is simply a long list of projects stretching into the far future or a cross Whitehall compendium of initiatives, will not succeed.  It must be tightly focused, setting out what the UK needs from its infrastructure and clear steps to attracting the necessary investment. 

“It should also map out how Government will create a political, regulatory and commercial environment that is conducive to achieving the goals of the plan. NIP 2 presents an opportunity that cannot be missed.”

Mr Clegg added: “Since we came into government Ministers have been expected to make savings. Now they’re under the same pressure to spend the money they’ve got and, on top of all that, we’ll also soon be announcing our plans to boost to housebuilding -still its lowest since the 1920s.”

The speech came just days after a survey of business leaders by the CBI and KPMG revealed the need for a detailed strategy remains the number one priority in order to improve funding of projects in the infrastructure sector.

Extract from Nick Clegg’s speech to the London School of Economics

And that brings me to infrastructure, because investment in infrastructure stimulates demand not overnight, but more quickly than many supply side measures. And it raises productivity well into the future too. Not just any infrastructure – we need to be clear about that. The previous Government took a kitchen sink approach: any and all capital spending constituted pro-growth investment. But that’s not true. Most capital spending is worthwhile. But it doesn’t all support long-term prosperity. You have to be ruthless, focusing on the investments that transform growth potential: transport, energy, digital communications. Roads and rail so manufacturers can transfer goods. Better broadband so small, high-tech companies can flourish. Renewable energy so low-carbon industry can too.

If you modernise this kind of infrastructure you stimulate activity in the shorter term and you build systems high growth industries can use for years to come. Transport schemes announced in the Spending Review, for example, will deliver major boosts to growth. Like the Switch Island link road in Merseyside, where £20m of Government investment will generate 35 times that in economic benefits. Or increasing the capacity of the M62, which will generate over £1bn for GDP. Investments that will keep on giving. The kinds of investments the UK needs.

We may be one of the best countries to set up and run a business. But we rank 28th in the world for infrastructure. A nation that once led the way in engineering and construction. The home of Wren, Brunel, Stephenson. It was Tim Berners-Lee, a British scientist, who developed the World Wide Web. Yet we rely on water and waste networks from the 19th Century. Our railways are a throwback to the 1970s. We have some of the most congested roads in Europe. While our competitors continue to invest in cutting edge infrastructure.

The approach has been too incremental. Haphazard. Slow. Governments have focused on specific projects instead rather than setting out a vision. Costs stayed high and investors took their money elsewhere. That has to change. So, last year the Coalition produced the UK’s first ever National Infrastructure Plan to deliver the world-beating infrastructure our businesses need from High Speed Rail, to Cross Rail, to green energy, to the best superfast broadband network in Europe. And we’re galvanising around that plan with renewed energy. A gear shift in government to unblock the system and get the money out the door.

First, money. Infrastructure doesn’t come cheap. So, over the spending review period, we have matched the plans of the previous Government for capital spending at least, in each year. We’re protecting spending in science and research, investing, for example, in new technology and innovation centres around the country. If we had more money, we would spend more on infrastructure, but there’s no longer a tap in Whitehall, to be turned on in times of need and the absolute crux of this is stimulating private investment too.

One way is by leveraging private money through public funds, as our Regional Growth Fund does. For every £1 of government investment, the private sector is putting in £5 to create thousands of new jobs targeted at areas too dependent on the public sector. I’ve asked Michael Heseltine and his panel, when reviewing bids for the second round, to prioritise infrastructure projects that will deliver sustainable economic growth. And I’ll be chairing a meeting of Ministers to begin looking at them this afternoon.

Our Green Investment Bank will also leverage funds for low carbon infrastructure, in the region of an extra £18bn by 2014-15. Vince Cable is ensuring Government identifies the first projects to get support faster than originally planned, looking at those from next month to get them moving as quickly as possible. And Chris Huhne will shortly be setting out our support for renewable energy – a year ahead of schedule - providing certainty for investors, capitalising on the UK’s position as the largest market for offshore wind.

We’re also ramping up our sales pitch. We know that the UK misses out because investors simply don’t know the opportunities on offer. We know they hesitate if they don’t see a long-term strategy. So I’ve asked Lord Green to use his Trade and Investment Committee to get our plan out there. Next week, Lord Sassoon will travel to Canada to pitch to pension fund investors. Later this month, Lord Green will do the same to leaders of the Gulf Sovereign Wealth Funds. We’re targeting the Middle East, Latin America and China, where there are investors with five year investment plans of over £150bn each. We’re also going to be much more proactive with institutional investors here at home too.

Finally, finding the money isn’t just up to us. The Cities Minister, Greg Clark, and I met with representatives from our big cities last week. They are desperate to deliver the infrastructure their cities need. So we’re drawing up new money-raising powers for councils to do that where they can borrow against future growth from locally raised business rates. Tomorrow Philip Hammond will also set out our plans to giving communities more power over the funding and decisions for local transport schemes.


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