Speed up pace of infrastructure action, say two thirds of businesses - CBI/AECOM

29 Oct 2015 01:26 PM

Quality of infrastructure is key factor for 9 in 10 firms when investing

The majority of businesses (62%) are concerned with the pace of progress on the delivery of infrastructure projects, and over half (53%) believe they won’t see necessary upgrades in the next five years, according to the 2015 CBI/AECOM Infrastructure Survey.

Read the 2015 CBI/AECOM Infrastructure Survey here

With 94% of the 722 firms surveyed saying the quality of infrastructure is a key deciding factor in planning their investments, there is clear consensus on the need to speed up the delivery of projects crucial to the British economy in this Parliament, and to reverse decades of underinvestment and policy change.

Momentum has been building in the last five years. Business has been encouraged by the Government’s moves, such as the creation of the National Infrastructure Commission and the use of Government guarantees to boost investment. Indeed, now, twice as many firms (43% of all businesses and 49% of infrastructure providers) see UK infrastructure improving instead of deteriorating (23%). Devolution has also been greeted with optimism, with 61% of firms believing it will improve delivery of local infrastructure, rising to 73% among English companies.

There are £411 billion worth of infrastructure upgrades, fundamental to the UK’s future, which need to be delivered. These include a new runway in the South East (important to 91% of firms), upgrades to the rail network (45% of firms want spending increased), and investment in a diverse, secure energy mix (vital to 97% of firms).

For these projects to be delivered this parliament, Britain’s largest business group and the global infrastructure services firm, AECOM, want to see the Government tackle the thorny issues, and create a business environment primed to support delivery from conception to completion.

John Cridland, CBI Director-General, said:

“The arteries of modern Britain are working overtime. Whether it’s our creaking railways, clogged roads, and crowded runways, or our digital links and the energy to power them struggling to keep up, businesses now want the Government to deliver the large scale upgrades that it has made ambitious strides towards. The quality of infrastructure is a key factor in firms’ investment decisions, so businesses, communities and the whole country simply can’t afford the cost of inaction.

“Business and Government are on the same page on the need to invest in our infrastructure future, as we have seen with the creation of the National Infrastructure Commission. But that hasn’t stopped wrong turns being taken, like the reversal on Government support for renewable energy.

“Delivery of key projects – from where we build a new runway to how we power our industry and homes for the future – must be the crowning achievement of this Parliament. That doesn’t just mean taking the tough decisions for the long-term. It means better planning and having the right skills in place to ensure there is seamless continuity from when the green light is given for action to getting spades in the ground.”

Richard Robinson, Chief Executive - Civil Infrastructure, Europe, Middle East, India and Africa, at AECOM, said:

“Political procrastination over infrastructure threatens economic growth and jeopardises investment. When infrastructure decisions are deferred, business takes the hit. The challenge for Government is to build business confidence, fostering a financial and operational climate that accelerates delivery.

“Industry needs the Government to maintain a clear and consistent vision, and to have the courage to make politically charged decisions when they are in the long-term interests of the country. Delays and never-ending reviews of vital infrastructure stall progress and help nobody.

“Recent moves such as the creation of a National Infrastructure Commission and the mapping of expertise against the project pipeline through the National Infrastructure Plan for Skills are welcome initiatives. But more needs to be done to support the development of UK companies’ intellectual assets and to create an environment that encourages the development and export of organisational and technical skills. Only then will UK firms be better equipped to compete on the global stage.”

Key statistics

Sector by sector

Energy:

• With nearly three quarters (74%) of firms saying energy security is crucial, almost all businesses (97%) see investment in a diverse and secure energy mix as vital.
• 90% of firms believe investment is put at risk by short-term changes to policy, reflecting recent uncertainty over the Government’s renewables policies.
• 91% of firms see a role for Government in helping businesses to manage their energy costs, with 88% seeing simplification of the energy efficiency landscape a vital step.

Rail:

• 81% of firms see rail as crucial to their operations. With rail journeys growing faster in the UK than in France or Germany, 90% of businesses see increasing capacity as a priority.
• 45% of companies believe capital spending should be increased beyond what was promised in the last Parliament.
• More than half of firms (55%) support HS2, but 92% say their support would be boosted with a clearer picture of how the project sits in the longer-term plan for the UK’s railways.

Roads:

• 96% of businesses are concerned about congestion on Britain’s roads, which costs the economy £8 billion each year (according to the RAC Foundation).
• 89% of firms see investment in motorways and local roads as crucial or beneficial, and more than half (56%) want to see further increases in spending, rising to two thirds (67%) in Scotland and Wales.
• To boost investment, almost three quarters (72%) are open to the idea of road charging.
• Over 90% of firms are concerned about the poor quality of the UK’s roads.

Aviation:

• 92% of firms see flights to one or more market as crucial or important. 65% view flights to the US as crucial or important, followed closely (64%) by flights to emerging markets.
• However, under half of businesses (45%) believe our connections to emerging markets are fit for purpose, and 39% see domestic links as problematic.
• Nearly all firms (91%) see a new runway in the South East as crucial or important. 41% of all businesses (and 50% of London firms) are already being impacted by the lack of runway capacity.

Digital:

• While 72% of firms report improvements in digital networks in the past five years, 59% are dissatisfied with their current quality. Greater reliability is seen as crucial by over four fifths of firms (84% for fixed line and 81% for mobile connections).
• The rapid digitisation of business means improved speed is key - this is most keenly felt by SMEs, 78% of which say it is important for fixed line connectivity.

Creating the right environment for delivery

Local planning:

• With 85% of infrastructure firms seeing red tape in the planning system as a significant barrier, 70% are prepared to pay higher fees for quicker decisions.

Skills:

• A clearer national pipeline of projects and greater collaboration between businesses is a priority for boosting skills (71% each).

Financing infrastructure:

• Greater sight of a longer-term pipeline of infrastructure opportunities is a key ask for nearly 9 in 10 providers (86%).
• With 78% of investors concerned that the risk of future policy change is holding back investment, almost all infrastructure providers (96%) want to see more politically robust decision making.

Devolution:

• Nearly two thirds (61%) of UK firms – and 73% of English firms – believe devolution will improve the delivery of local infrastructure.
• 79% of infrastructure providers view certainty of revenue, and 76% see local business leadership, as crucial to driving this improvement.

Taking decisions:

• Almost all firms (98%) want to see an evidence-based approach to long-term infrastructure decisions. 99% of firms see this as the top priority for George Osborne’s National Infrastructure Commission.
• 92% of firms want greater engagement with communities impacted by infrastructure decisions, and 91% believe better explanation of the local benefits of new infrastructure is key.