Regulatory pressure including the RIIO settlements have created a “nervousness in investors” and a new uncertainty and the government “missed an opportunity in the budget to put that right,” according to Lawrence Slade, chief executive of the Global Infrastructure Investment Association (GIIA).
Speaking at a meeting hosted by law firm BDB Pitmans, he said policy clarity could unlock £200B in ‘dry powder’ – funds raised and not yet committed to infrastructure assets.
But “We are in an international market in attracting financing and we need not just a vision but a delivery plan”. He revealed that confidence in investing in the UK was lower this quarter than it was in the last.
He said the UK has to double investment levels to £40B per year across infrastructure sectors over the next ten years, to meet Net Zero targets. But “For more than half there is no policy framework to provide investors with confidence over returns.” After the Energy White Paper, Ten Point Plan and other publications “we expect lots of strategies in 2021, but what we actually need is a delivery plan”.
What is more, he said, although government had said that it wanted private investment in infrastructure, “it has not been as clear as it might be on where it wants private capital to come in”.
He gave a cautious welcome to plans for a national infrastructure bank, but asked “How will the mandate be set up?” He warned, we have seen infrastructure banks that have crowded out private finance – it needs to crowd it in, especially when the public purse is under pressure, and take risks on nascent technologies.”
On regulation, he said there should be
- A clear division of roles between government and regulators
- Up to date duties to reflect current challenges
- Intergenerational equity in costs of infrastructure
- Incentivisation for innovation over the long term
- A robust and speedy regulatory appeals regime
- Support for a framework for investment across the economy
Slade’s comments come as manufacturers organisation Make UK has written to the Secretary of State for Business with concerns over the decision to cancel publication of a refreshed Industrial Strategy the loss of the accompanying Industrial Strategy Council.
Make UK chief executive Stephen Phipson said the lack of an Industrial Strategy will be of concern to the manufacturing industry, which is facing a series of simultaneous and defining challenges. The MakeUK letter asks the Secretary of State how the government intends to work with the sector and engage them on matters of underpinning activity such as national infrastructure investment. It wanst government to set out the detailed thinking which will boost confidence that UK manufacturing is the right place for domestic and international investment.