FUNDING SUMMIT DEBATES FUTURE OF INFRASTRUCTURE FINANCING
10 February 2010: Representatives from the three main political parties joined industry leaders and policy specialists yesterday at a special Summit to debate the future funding of UK infrastructure.
There is a wide consensus that the UK will need to invest heavily in infrastructure in the coming decades if we are to meet climate change targets, improve energy security and boost our economic performance. However there is debate and uncertainty amongst the political parties about where the funding for vital infrastructure projects will come from in the future.
The Infrastructure Funding Summit was organised by the Institution of Civil Engineers (ICE), which has been calling for the creation of a UK National Infrastructure Investment Bank or similar funding mechanism, to attract the large volumes of private capital which will be needed to fund essential infrastructure investment.
The newly formed Infrastructure UK can provide a focal point for planning and prioritising investment for UK infrastructure projects in the coming years. However ICE has raised concerns that projects cannot be planned and prioritised until long term funding sources have been identified and secured.
Economic Secretary to the Treasury Ian Pearson MP, Shadow Minister for the Treasury Mark Hoban MP and Liberal Democrat Shadow Chancellor Dr Vince Cable MP, all delivered speeches on infrastructure funding and took questions from high level industry figures. Policy specialists from a range of organisations including ICE, Local Partnerships and Goldman Sachs and also took part in a debate on potential infrastructure funding solutions.
Ian Pearson MP, Economic Secretary to the Treasury, said:
“We have seen significant investment in UK infrastructure over the last decade resulting in new hospitals and schools and improvements in transport links to other sectors, benefitting huge numbers of our citizens.
“The challenge now is to raise the bar by attracting new sources of private sector investment as we plan, prioritise, finance and deliver investment in a low carbon future. The setting up of Infrastructure UK represents the next stage of this Governments vision to develop the UK’s strategy for national infrastructure.
“By acting as a focal point for infrastructure investors, operators and contractors for Government departments and other bodies with infrastructure responsibilities, Infrastructure UK can drive forward this agenda. The Government will unveil its strategic approach at Budget.”
Mark Hoban MP, Shadow Minister for the Treasury, said:
“There is an important role for private sector finance in the provision of infrastructure, but we need radical reform to government if we are to make sure the UK is an attractive place for private finance and to ensure we get maximum value for money for the tax payer.”
Dr Vince Cable MP, Deputy Leader of the Liberal Democrats and Shadow Chancellor of the Exchequer, said:
“The Liberal Democrats have been strong advocates of the idea of a National Infrastructure Bank for some time. It is very clear there is enormous potential demand for infrastructure investment which the existing mechanism cannot meet, because of the difficulties facing banks and the Government’s own financing problems.
“There is a potential source of funding from institutional investors – pension funds and insurance companies - who are looking for potential safe investment opportunities.
“Government has a prime role to play and we are talking to Industry about how best to design an appropriate vehicle.”
ICE President, Professor Paul Jowitt, said: “This summit provided a much needed platform for a range of key stakeholders to debate some of the pressing issues surrounding the future of infrastructure funding.
We must find a way of ensuring continued investment in our transport, energy, waste, flooding and water infrastructure, despite the restrictions the current financial situation places on government spending. This is not just for the benefit of industry and the economy, but for the benefit of society as a whole – our quality of life depends on infrastructure.
“We are confident that an alternative approach to financing vital infrastructure, such as a National Infrastructure Investment Bank, can be agreed upon. This approach would ensure that essential infrastructure continues to be built - without diverting money away from front line public services.”
ENDS
Notes to Editors
The summit took place today and was organised by ICE. It was sponsored by Local Partnerships and Bechtel and took place under the Chatham House rule.
The Summit aimed to address the following issues.
·How can the high degree of risk associated with infrastructure projects be reduced or better managed
·How can government most effectively deploy its varied roles as strategic policy makers, client, funder and guarantor of services
·What should be government’s contribution to infrastructure finance? How much is needed and in what form should it be made available
·Do we need a new institution such as National Infrastructure Investment Bank or a Green Investment Bank
·What kind of new products could encourage individual investors to direct savings towards infrastructure investment
·How can the potential for investment from major institutional players including pension and sovereign wealth funds be unlocked
·How can we ensure that public sector bodies can access the UK’s world leading expertise in finance, procurement and project management
For further information please contact:
Kate Ison
ICE Press Officer
t. 0207 665 2104
Kate.ison@ice.org.uk
The Institution of Civil Engineers (ICE) was founded in 1818 to ensure professionalism in civil engineering. It represents 80,000 qualified and student civil engineers in the UK and across the globe. The ICE has long worked with the government of the day to help it to achieve its objectives, and has worked with industry to ensure that construction and civil engineering remain major contributors to the UK economy and UK exports.