Despite the Government’s strong commitment to improving the UK’s infrastructure, both business and the public are concerned about the pace of delivery and a record number of firms are dissatisfied with the state of infrastructure in their region, according to the 2017 CBI/AECOM Infrastructure Survey.
With the UK currently ranking 27th in the world for the quality of its infrastructure, nearly all (96%) of the 727 businesses surveyed see infrastructure as important (of which 55% view it as critical) to the Government’s agenda. From the Clean Growth Strategy and the £500 billion infrastructure pipeline to its decision to build a new runway at Heathrow and press ahead with the A303 tunnel, the Government has made clear its commitment to British infrastructure.
However, only one in five firms is satisfied with the pace of delivery (20%) and almost three quarters (74%) doubt infrastructure will improve over this Parliament. This lack of confidence is attributed primarily to policy inconsistency (+94% of firms) & political risk (+86%). The digital sector is the exception, however, where 59% of firms are confident of improvements.
For the first time, this year’s Survey included the public’s views on infrastructure. Their opinions closely mirror those of companies, as only 26% of the public believe delivery is satisfactory and 76% doubt any improvement will occur this Parliament.
Firms’ dissatisfaction with infrastructure in their region has increased – over half (54%) are dissatisfied (or very dissatisfied), an 8 percentage point increase on last year’s Survey.
Carolyn Fairbairn, CBI Director-General, said, “We’ve seen a real commitment from the Government on infrastructure over the last year, from decisions on Heathrow and the A303 to pledges to scale up the supply of housing and clean energy. But our survey shows this is not translating into optimism about future improvements among both firms and the public, who are united in their concern about the pace of delivery for new projects. We’ve now reached crunch time for the UK’s infrastructure.
“As the foundation for wider growth, world-class infrastructure is fundamental in driving productivity, and helps create jobs and raise living standards. Our message is as clear as it is simple – this is no time for discussion and delays, it’s time for delivery. This needs to be heard not just by Westminster, but by local and devolved governments, as making progress on smaller, local projects is just as important as the bigger projects. Firms will not be forgiving if this focus slips.
“With continuing uncertainty over Brexit, it’s all the more important the Government delivers quality infrastructure as a key pillar of a modern and effective Industrial Strategy, from excellent quality gateways to the world to a funding framework that gives investors the sustained confidence they need. It is a vital lever for spreading prosperity across the whole of the UK.
“These findings must not be confused with pessimism though. Businesses have been unambiguous about what needs to happen, from delivering on the current road and rail pipelines to putting in place an urgent long-term energy plan and making housing a top priority. Firms are keen to work shoulder to shoulder with the Government, bringing their construction and funding capability, innovation and agility to the table, enabling the UK to face the future with confidence.”
Richard Robinson, Chief Executive – Civil Infrastructure, Europe, Middle East, India and Africa, at AECOM, said, “Given the strong correlation between infrastructure investment and economic growth, it is hardly surprising that when infrastructure decisions are delayed, it is UK business that feels the pain. Indeed, the overriding message from business and the public in this year’s survey is clear: more needs to be done to raise confidence and up the pace in which infrastructure is delivered. Now is the time to provide clarity around infrastructure investment and accelerate action.
“Transformational infrastructure necessitates bold decisions and strong vision. The next five years present a huge opportunity for the Government to set in train a lasting legacy for future generations. The link between transport and long-term plans for other vital infrastructure such as energy, water, waste and housing must also be considered. A clear vision for integration will be essential to accommodate the UK’s projected population growth and maintain economic prosperity.
“Despite the backdrop of Brexit and political uncertainty, we have certainly seen some welcome progress this year, but it is essential that we don’t rest on our laurels. The focus now must remain on progressing the UK’s ambitious infrastructure pipeline. Schemes such as the third runway at Heathrow, Crossrail 2 and the Northern Powerhouse programme are world-class projects that provide bright beacons of British success and innovation and are vital to the country’s ability to compete on a global stage. However, if we are to grasp the opportunity to make major progress on infrastructure, the issue must remain high on the government’s agenda, underpinning a modern industrial strategy.”
Devolution is still seen as an opportunity, with 42% of firms believing it will lead to improvements in infrastructure. But this figure represents a drop from the 2015 and 2016 Surveys (61% and 47% respectively), so it’s clear devolution must translate into improved infrastructure results across the whole country.
With close to two thirds of businesses (62%) not confident that the UK’s competitiveness will increase by 2030 because of its infrastructure, skills shortages have come to the fore as a critical area. Indeed, as the UK leaves the European Union, firms see access to skills and talent from the EU as the top priority for digital, energy and aviation in building a new relationship (48%, 43% and 42% respectively).
Encouragingly, over half of firms (51%) see new free trade opportunities with non-EU countries as positive. Meanwhile, 45% of companies think that improvements in rail and road access to ports and airports are critical for the UK to capitalise on a new trading future. However, with infrastructure accounting for nearly half (47%) of European Investment Bank investments in the UK, there is very little confidence firms will receive similar funding post-Brexit – for example, 71% of firms aren’t confident the roads sector will receive the funding it needs in future.
Key statistics by sector
Energy
• Setting out a post-2020 power sector investment framework is the top energy priority for the Government, with 98% of firms citing this as critical or important, followed by supporting greater innovation (90%)
• After access to skills and talent from the EU (91%), the top Brexit energy priorities are the UK’s future vis-à-vis the Internal Energy Market (86% - rising to 92% for those who were energy providers), regulatory equivalence (76%), and access to funding, such as the European Investment Bank (75%)
• Nearly three fifths (58%) of firms are not confident that energy infrastructure will improve
• Almost half (49%) of energy providers are dissatisfied with the delivery and policy environment, a rise from last year’s Survey (42%)
• All energy providers surveyed (100%) said the Government needs to set out a plan to provide a clear and long-term framework for energy policy – firms will therefore welcome the Government’s recent Clean Growth Strategy.
Transport
• Delivery of the current Road Investment Strategy is the top transport priority for the Government, with 92% of firms citing this as critical or important, followed closely by delivering improvements to local road networks (88%) and the delivery of the current rail enhancement programme, CP5 (88%)
• Regarding aviation priorities for a new relationship with the EU, 92% of businesses thought agreements between the EU and third party countries was a critical or important issue to be addressed, ahead of access to skills and talent from the EU (90%)
• Transport providers are dissatisfied across the board with infrastructure delivery and the policy environment:
o Rail (61% of firms are dissatisfied)
o Roads (50%)
o Aviation (37% dissatisfied, but only 25% satisfied)
• A majority of firms are not confident transport infrastructure will improve:
o Road (68% of firms are not confident it will improve)
o Aviation (65%)
o Rail (61%).
Digital
• Improving the speed and reliability of connections is the top digital priority for the Government, with 98% of firms citing this as critical or important. This is matched by the need to strengthen cyber resilience (98%) – however, over two thirds of firms (68%) are not (or not at all) confident in the UK’s current cyber security strategy
• After access to skills and talent from the EU (91%), the free flow of data (90%) and the digital single market (88%) are seen as the most important issues to address in forging a new relationship with the EU
• Digital bucks the trend when it comes to confidence in improvements, with a majority of firms (59%) feeling confident that digital infrastructure will improve.
Housing
Housing is a new sectoral addition to the 2017 CBI/AECOM Infrastructure Survey.
• Promoting housing as an infrastructure priority is the most critical housing priority for the Government, with 90% of firms citing this as critical or important (of which 43% cite it as critical), followed by the delivery of more affordable homes (85%, of which 42% cite it as critical)
• Over four fifths (88%) of firms are not confident the Government will deliver its proposals in the 2017 Housing White Paper
• Nearly two thirds (64%) of firms are not confident that housing infrastructure will improve.
