Businesses are concerned that two years of positive Government infrastructure policy announcements will not translate into delivery on the ground and could undermine the return to sustainable growth, a new CBI/KPMG report reveals today (Monday).
The survey of 526 business leaders shows an improving UK infrastructure investment environment, but finds that two out of three firms (65%) believe that government policies will have no tangible impact, or even a negative one. With only a third of businesses (35%) believing that they will make a difference on the ground.
The report, Connect More, highlights the importance of infrastructure to sustainable UK growth, yet with many outstanding issues such as the future funding of the road network, aviation capacity and clarity over the costs of HS2, businesses expect things to get worse over the next five years.
John Cridland, CBI Director-General, said: “Quality infrastructure is vital for boosting exports, unlocking business investment across the UK, and supporting our leading firms – an essential element of a meaningful industrial strategy.
“I know that ministers share my enthusiasm for progress, but Government has talked the talk on infrastructure for the last two years with too few signs of action.
“The faltering speed of delivery on infrastructure creates a worrying sense that politicians lack the political will to tackle some of the major issues head-on.
“We can’t afford any further delay. The Coalition must show strong leadership and prove that the UK can deliver on a small number of projects over the next 18 months and reach a much-needed consensus on bigger issues such as aviation and roads reform.”
Richard Threlfall, KPMG Partner, said: “The state of our infrastructure is not a theoretical debate. For UK business it is about bottom line profitability and international competitiveness. It is about transport networks that get supplies in and products delivered on time, energy supply that is dependable at lowest cost and digital networks that offer fast connectivity anytime, anywhere.
“Sadly the business verdict remains that UK infrastructure is not up to scratch. It is disappointing to hear businesses report once again a sense of more rhetoric than action. Of particular concern is growing dissatisfaction with links between our regions, and the 73% of respondents who believe our local road network continues to deteriorate.
“Overlaid on this is the fear amongst businesses that too many critical investment decisions are being pushed back to beyond the next election. Our businesses are competing each day, every day in the global market, and we need to be investing now in building great infrastructure that is a help not a hindrance to our entrepreneurial efforts. We know what good looks like – we need to get on and build it.”
The CBI is calling for five practical steps to be taken in the next 18 months to boost immediate construction, while also setting the groundwork for longer-term decisions:
Since last year’s survey, businesses progressively view direct flights to emerging markets as key to their success – China (57%), India (50%), Brazil (46%), Russia (36%).
The UK’s investment environment
The UK is increasingly perceived by infrastructure providers as an attractive place to invest, having overtaken the EU as an investment location. But the UK still lags behind competitors in Australasia, North America and the Middle East.
With 85% of projects in the National Infrastructure Plan needing to be delivered by the private sector, businesses want further action to make the UK stand out from the crowd, including the introduction of a capital allowances for construction of infrastructure projects.
John Cridland concluded: "The huge number of businesses concerned about energy supply and costs is alarming. The Government must get the Energy Bill onto the statute books and bring forward secondary legislation to give potential investors the certainty to deliver the energy infrastructure we need to keep our lights on in the future.”
Click HERE to view the full report
Notes to editors:
The CBI is the UK's leading business organisation, speaking for some 240,000 businesses that together employ around a third of the private sector workforce. With offices across the UK as well as representation in Brussels, Washington, Beijing and Delhi the CBI communicates the British business voice around the world.
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 12,000 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2012. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 156 countries and have 152,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.
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