Richard Threlfall, KPMG’s Head of Infrastructure, Building and Construction comments ahead of the Spending Review on the government’s plans to spend more money on infrastructure investment:
“Infrastructure appears certain to be centre-stage in the Spending Review announcement, with the Chancellor apparently ready to commit ‘tens of billions of pounds’ to big infrastructure projects.
“This will be good news, but only if behind those headline numbers we find new projects, not just a repackaging of existing commitments. According to the OECD the UK Government has consistently over the last 30 years invested less in our infrastructure as a percentage of GDP, than major competitors including the US, Canada and France. Current spending plans would see that investment fall further to 1.4% of GDP. This Spending Review is our last chance to reverse that trend and avoid the UK heading into a downward spiral towards a second tier economy.
“But driving economic growth is not only about increasing levels of Government investment. 65% of the UK’s infrastructure is already privately financed. With experts estimating that at least £400bn needs to be invested in our ailing infrastructure over the next 10 years, the Government needs to do everything it can to create the conditions that encourage private investment. There are three things the Government could do, that would make a real difference:
“The government needs to offer great clarity to the private sector of its infrastructure vision, and greater regulatory certainty. Ongoing reviews in energy, in roads and in airports are each creating a hiatus that stalls private investment. The Government’s recent withdrawal of support for three waste to energy schemes leaves the industry scratching its head as to Government policy.
“The government should make more effective use of the guarantee scheme it introduced last year. More promoters and developers would come forward with ideas if the Government could offer more clarity as to the types of schemes it would support.
“And it should consider re-establishing tax relief on infrastructure investments in line with other G20 countries, a move that would have real and lasting impact on jobs and capital investment in the UK.”
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