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CBI reaction to government infrastructure plan

'The time for grand announcements is over. Ministers now need to follow through urgently on their promises or they risk the private sector growing even more frustrated'
The CBI has made its initial response to the Chief Secretary to the Treasury’s parliamentary statement on the Government’s Investing in Britain’s Future plan. A fuller statement will follow.

Katja Hall, CBI Chief Policy Director, said:
“This is the kind of bold, ambitious package which businesses have wanted for years - but the time for grand announcements is over. Ministers now need to follow through urgently on their promises or they risk the private sector growing even more frustrated.

“It’s clear the Coalition now sees it was wrong to cut capital spending so deeply in 2010. Long-term growth needs long-term investment – investing an extra £15 billion over the next Parliament will go someway to redress the shortfall.

“The energy plans are a big step forward and should unlock the private investment we need to keep the lights on and costs down. The renewables strike price and capacity mechanism will enable investors to take their plans off the drawing board and on to building sites. The Energy Bill’s passage has dragged on long enough - the big task now is to get it on the statute book as soon as possible.

“Extending the UK Guarantees Scheme is a no-brainer. Potential investors have been put off by the impending cliff-edge next year. The new guarantees for the Mersey Gateway and Hinkley Point will reassure business that ministers are backing up their promises with real action.

“The rush of road projects will create jobs in the short-term and boost growth in the long-term. We can’t afford ever-rising congestion and the dire quality of some of our roads, if we want to attract inward investment and drive up exports.”

 On energy
“A balanced energy mix is the best way of securing a low-carbon and affordable supply in the future – today shows progress towards that.

“The positive news on shale deposits could provide a significant boost to energy security and jobs, if it can be extracted safely.  These projects need local communities on board so it’s right to look at how they can share the rewards.

“We’ve long-argued that it is a false choice between going green and economic growth. Giving the Green Investment Bank borrowing powers will give it real teeth to support investments in low-carbon technologies.”

 On Lord Deighton’s capacity review
“It’s clear that too often Whitehall simply doesn’t have the commercial nous or managerial expertise to get major projects through. We welcome Lord Deighton’s work to inject a more hard-nosed approach into getting a better deal for the taxpayer and speeding up progress.”

 On the Highways Agency
“We must change the current patch-and-mend, stop-start approach to repairing the road network. Giving the Highways Agency long-term funding means it can’t fall victim to the short-term whims of ministers and allows contractors to plan for the future with confidence.

“This is only the first step. We need a radical overhaul in how we pay for and manage the road network to attract long-term private investment, instead of relying on ever-tighter public funding.

“Bringing forward the A14’s start-date is a huge shot in the arm of the regional and wider national economy. We now must nail down the detail of how we fund it.”

 On HS2
“We cannot sit on our hands when the West Coast Main Line is set to reach full capacity by the 2020s – squeezing out passengers and freight. We back sustained, additional capital investment in the existing rail network to meet soaring demand.

“The HS2 project is important but it needs to wash its face. Industry, investors and taxpayers need confidence that the business case and programme management is watertight. Given wider public spending constraints, ministers need to keep very firm control of costs.”

 On housing
“Ministers have been bold in boosting the mortgage market in the short term but the missing piece of the puzzle is ramping up housing supply.

“The government has listened to the CBI’s calls to invest in the Affordable Housing Programme beyond the current 2015 cut-off. This is a further step towards addressing the massive shortfall in new homes.

“Accelerating the release of public sector land is right but we’ve heard this from government many times before. Ministers need to cut through Whitehall and council red-tape to make sure land is freed up far more swiftly.”

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