Skip to content
Infrastructure blog

Government outlines £600bn investment for the built environment

26 November 2018
The government has published the latest iteration of the National Construction and Infrastructure Pipeline.
Government outlines £600bn investment for the built environment
Some £600bn of investment in the built environment over the next 10 years has been announced by the government in its National Construction and Infrastructure Pipeline.
The pipeline outlines planned investment in infrastructure and construction in the public and private sectors and is released annually.

Approximately £400bn of this investment will take place by 2020/21, with the remaining £200bn to be invested by 2027/28 in a range of different projects, including: Hinkley Point C nuclear power station, improvements to the A14 in Cambridgeshire and Thames Tideway Tunnel. This scale of continued investment is welcome.
This year’s pipeline has been accompanied by the announcement of a consultation examining how the government can increase the use of off-site construction techniques in publicly-funded projects.
Off-site manufacturing can reduce construction costs, boost productivity and therefore contribute to the more efficient delivery of projects. The government’s ambition to increase off-site construction is therefore another step in the right direction.

Public vs private funding

In examining the funding detail in the 2018 pipeline, there are few surprises.
The overall split of public and private funding is around 50% each, which is broadly in line with what has been seen previously. The energy and utilities sectors account for much of the private funding, while the transport sector continues to be heavily dependent on public money.
For large parts of the transport sector – highways and rail – the long-term sustainability of this approach is questionable.
As ICE’s State of the Nation 2018: Infrastructure Investment report identified, the amount of revenue generated by the current generation of road and vehicle taxes could fall significantly following the shift to electric vehicles.
As such, linking the funding of highways with these taxes (as is the case with Vehicle Excise Duty for the second Roads Investment Strategy for England) is a risk further into the future.
There’s a growing need for alternative forms of funding to be considered, including pay-as-you-go schemes.
Likewise, to help drive innovation and improve the delivery of projects in rail, there’s a need to bring more private funding online to ensure a more diverse investment mix.
In this respect, the government could do more to make a success of market-led proposals. In particular, simplifying the application process and ensuring that the intellectual property associated with such proposals is better respected. Both of these steps would likely result in greater private investor engagement in rail projects.

Risk and visibility 

The production of the pipeline is a huge undertaking. It provides a useful snapshot of the investment landscape, which in turn enables construction businesses and the investment community to plan activities accordingly.
However, having spoken to several major investors during the evidence-gathering phase for ICE’s infrastructure investment report, feedback was that the pipeline could be more effective. This would be the case if it contained information on the risks associated with individual projects, the variability of returns or details around project planning and the scale of programmes.
Visibility is also critical to ensure that more investors are aware of the many opportunities that exist in the UK’s built environment sector. Regardless of the degree to which projects are or aren’t struggling to reach financial close, there’s an onus on the government to do all it can to promote projects (via an improved pipeline and through alternative channels as well) to ensure that the infrastructure networks that the UK requires are delivered.

The National Infrastructure Strategy

A National Infrastructure Strategy (NIS) is expected in 2019. As a final thought, it might be appropriate to start thinking about how the pipeline could be effectively used to underpin its publication.
Linking the two has the potential to ensure that the NIS provides both a strategic outlook that considers how the UK’s infrastructure should be planned and delivered, while also providing the detail of how this should work on the ground at the individual project level.
  • Ben Goodwin, lead policy manager at ICE