CBI have launched a report in response to the Chancellor’s Autumn Statement – that included the National Infrastructure Plan – and have outlined how the public sector can play a greater role to unlock private sector investment in infrastructure. CIHT welcome this report and how elements of it are similar to concepts and proposals previously made by CIHT to Government.

A long term view

CIHT have consistently called for the establishment of a cross-party group to develop and commit to a 20 year strategy for transport infrastructure across the UK. This would help deliver on the CBI recommendation as it would provide a better pipeline of upcoming green and brownfield infrastructure opportunities.

The role of the public sector as a facilitator for growth

The CBI report states that the public sector must commercialise its approach to harness private sector investors, their report states that the public sector’s behaviour must adapt to facilitating the private sector to play a greater role. This view was previously articulated in the CIHT report: ‘Infrastructure Funding and Delivery’ – developed in collaboration with Parsons Brinckerhoff (PB) - as it stated that both central and local government roles should move towards becoming facilitators for growth and investment in infrastructure, and not necessarily delivering and funding infrastructure themselves.

The proposals for government underwriting

CBI called on the government to underwrite a larger number of infrastructure projects in order to encourage the private sector to shoulder the bulk of the cost of updating the nation's road, rail and air networks.

CIHT – in their report ‘Infrastructure Funding and Delivery’ – had previously called for the public sector to provide forward funding or commercial underwriting for existing infrastructure schemes which are financially viable. The CIHT report outlined the approach as follows: ‘Where there are sufficient private sector contributions to ultimately pay back funding, but private sector cashflow constraints prevent the scheme progressing, the Government has an opportunity to provide low-risk forward funding to stimulate the economy by the development of essential infrastructure’.

The CBI says part of the problem lies in the way that credit ratings are assigned to infrastructure projects. Institutional investors are reluctant to invest in brand new projects which may still be in the planning stages, because these are rarely assigned investment-grade ratings. In its report, the CBI suggests that the government can help lessen the risk to private investors by guaranteeing a small share, around 10 percent, of a project's funding costs, and agreeing to place itself lower in the ranking of creditors in the event of a loss.

Local infrastructure funds

CIHT report also called for the Government to create transport infrastructure investment portfolios to spread risk and provide a mechanism for local communities to invest in infrastructure which provides them with a direct benefit and return.

The CBI report outlines a similar approach in that pension fund investment in local infrastructure, with their knowledge of their own areas of operation, could help provide a boost to the local economy by catering to local business and prospective investors’ demands for better capacity, maximising the potential for economic growth.

To achieve this CIHT believe that councils should be given powers over creating their own user charging schemes, such as small-scale congestion charges on local roads. CIHT believe that road pricing at both the national and local level has the potential to deliver economic, social and environmental benefits.

Pensions investment

Like CBI, CIHT believe that the Government needs to show greater progress in securing pension investment to deliver infrastructure. CIHT welcome the CBI report in continuing to provide ideas on how to improve the deliverability of infrastructure within the UK.

• CBI report ‘An offer they shouldn’t refuse: Attracting investment to UK infrastructure’

• CIHT members can debate the report on the LinkedIn group.

• CIHT news release and report ‘Infrastructure Funding & Delivery’.

• CIHT and PB have been running CIHT Branch Breakfast Meetings around the Infrastructure Funding initiative – Gt.London, South West, North East, North East, Yorks & Humberside, West Midlands, the Midlands, and Wales (Cardiff).  There is a final seminar planned in Scotland (Glasgow) in June.