Greater private investment needed to boost UK infrastructure

New report highlights UK’s status as leading destination for international investment, and as provider of global expertise in Public Private Partnerships

A new report published today (Tuesday 24 June) by TheCityUK has found that more private investment is needed over the coming years if necessary upgrades to UK infrastructure are to become a reality. This is on top of the £375bn the UK Government plans to invest as part of its National Infrastructure Plan. However, the report shows that Britain’s status as a hugely attractive destination for international investors – typified by a series of agreements announced with China last week – means it is well-placed to benefit from the global increase in cross-border infrastructure investment.

According to TheCityUK’s Infrastructure 2014: Trends, demands and challenges report, since 2010 there has been around £15billion of non-EU investment in UK infrastructure, and that figure is expected to grow significantly in the coming years. This coincides with a global demand for infrastructure investment, with an estimated $1trillion a year needed to plug the global infrastructure gap across sectors including energy, road and rail, telecommunications and water.

The new report is being published at an event today on international procurement opportunities for UK businesses, hosted by Norton Rose Fulbright and supported by TheCityUK.

Chris Cummings, Chief Executive of TheCityUK, commented:

As the UK emerges from the economic slowdown and moves into a period of economic growth, there is considerable demand for upgrading existing infrastructure or investing in new, greenfield projects.  But it’s clear that this is a worldwide trend. As such, the global competition for private investment will dominate the next decade.

The good news for the UK is that it is right at the front of the queue. It continues to prove itself as an attractive destination for international investment - last week’s agreement between TheCityUK and the China Development Bank is a prime example. As sources of finance for projects become more diverse and more global, it’s more important than ever that the considerable blend of expertise required for the projects to be a success - advisory, legal, accountancy, banking, investing, insuring – are in place. In the UK, these are now more widely available and in greater depth than anywhere else in the world.

Continued investment in UK infrastructure is vital to secure our economic competitiveness. Our comprehensive research shows that infrastructure investment enhances economic performance in both the short-term, through a demand for goods and services, and long-term, by creating jobs and establishing a more efficient environment for businesses to work in. We look forward to working with our members and overseas partners to ensure a bright future for UK infrastructure and for the wider economy.

The report from TheCityUK also reaffirms the UK as a world leader in using Public Private Partnerships (PPPs) to deliver services.  Latest government statistics show that 732 projects reached financial close by the end of 2012. TheCityUK estimates that in 2013, the value of PPP deals in the UK increased by 15-20% on the previous year.  

According to TheCityUK, this pre-eminence on public-private finance initiatives means the UK will remain a leading global centre of infrastructure expertise in the coming years.

Chris Cummings added:

The UK has been at the forefront of pioneering private sector involvement in certain public services.

It is not easy, though: creating these partnerships and ensuring they are successful is a complex task.  However, the UK has two decades’ experience and expertise that puts it in good stead to provide the skills and capacity needed to deliver projects. 

“This is why the UK will play a key role in plugging the global infrastructure investment gap in the coming years, particularly in emerging markets. With over 100 countries currently looking at how to introduce PPPs, the UK’s unrivalled experience means we have expert practitioners working with local partners around the world, to ensure the successful implementation of schemes which will boost economic growth.