Private capital is ready and able to build a better Britain

Read GIIA’s latest OpEd in today’s Daily Telegraph….

The UK is currently home to Europe’s largest market for private investment in infrastructure, with transaction volumes by value higher than in France and Germany combined. The pioneering use of private capital models since the late 1980s, through the use of economic regulation and Public-Private Partnerships, has led to the UK dominating Europe’s infrastructure market for private capital.

This private investment has been associated with a huge boost to the quality of infrastructure in sectors such as energy and water networks, airports and digital infrastructure. However, more investment is needed in the future. Along with other developed nations such as Germany and the United States, the UK continues to face an infrastructure investment gap of 0.5% of GDP – which is around £10bn per year in the UK’s case.

A recent Ipsos Mori poll, in partnership with the Global Infrastructure Investor Association, shows that 73% of the public understands the importance of investment in infrastructure for future economic growth but nearly six in ten Britons do not believe that enough is being done to meet their country’s future infrastructure needs.

At a time of strained public budgets, private capital will be an essential component in increasing investment in infrastructure and, interestingly, Britons appear to be content with this. For example, by a margin of two and a half to one, the public are happy with FDI if it leads to a more rapid delivery of infrastructure.

According to the Government’s own projections, £600bn of infrastructure investment will be needed over the next decade. Securing this investment, much of which will need to come from private sources, will be essential if the UK is to meet the ambitious infrastructure challenges set out by the National Infrastructure Commission. Targets include energy networks needing to cope with at least 50% of electricity coming from renewables by 2030, full fibre broadband being nationwide by 2033 and halving water leakage by 2050.

But securing the necessary private investment to deliver the Government’s ambitious infrastructure pipeline could be at risk. The Chancellor has abolished PFI in his recent Budget with no replacement model in place. Moreover, the decades of broad consensus on the benefits of private sector expertise and stable investment streams is being challenged. Labour’s 2017 manifesto pledged a programme of renationalisation that would result in a return to the days when our infrastructure needs have to compete for public funds alongside our growing healthcare and education requirements.

Such uncertainty for investors could not be happening at a worse time on the back of Brexit.

Just when the UK needs to remain attractive to investment in order to secure robust economic growth into the future, analysis from EY shows that, whilst it remains an attractive place to do business, the UK has been losing ground in terms of attracting FDI.

By contrast, many other nations are courting private capital to help deliver high quality infrastructure. While the UK is, for now at least, ceasing the use of PPPs to deliver infrastructure, US states such as Colorado are using PPPs to procure major transportation projects. Other countries are implementing new PPP-enabling legislation for the same purposes. For example, Romania’s Government has just launched its first public procedure for a PPP to construct a motorway, Norway and Finland have major road PPPs coming up, Austria is tendering one of its largest ever PPPs on broadband and Belgium is continuing its PPP programme for prisons.  In fact, globally, there are nearly 1,200 PPP projects which are being prepared for, or are currently in, procurement.

Across the other side of the globe, Australia has pioneered an asset-recycling programme whereby the proceeds from the sale of public assets are ring-fenced to pay for new infrastructure. New South Wales, for example, has utilised this mechanism to increase its budget for infrastructure in general, and increase funds dedicated to the development of local infrastructure.

And it is not just developed nations seeking private capital – emerging economies will want vast amounts of investment in the coming decade. It is estimated that $1.7 trillion per year will be needed in infrastructure investment across Asia by 2030, highlighting the growing options for private investors going forward.

Thankfully, the UK still remains Europe’s top destination for FDI. But while other countries embrace the benefits that private investment brings, it would be dangerous for the UK – which pioneered many of the private capital models used worldwide – to give an impression of hostility to private capital. Unlocking further private capital will be vital in delivering the critical infrastructure milestones that the public expects in the coming decades and politicians of all sides should be open to dialogue with the private sector on how best to achieve that.

For a link to the article, please click here

 

‘Future of Infrastructure’ – Special report in partnership with GIIA

Raconteur, in partnership with GIIA, has today published a special report: Future of Infrastructure. The Report has been published online and in hard copy format inside The Times.

It includes articles on UK Policy, Technology, Green Cities, Electric Vehicles, Funding and Low-Carbon Infrastructure and features contributions from various GIIA Members – Macquarie, AMP Capital, Arcus and Curzon Trinitas – and an opinion column from Andy Rose.

Please see attached PDF to see the whole report Future of Infrastructure – special report 2018

 

 

GIIA’s response to UK Green Paper on National Security and Infrastructure

GIIA responds to UK Green Paper on National Security and Infrastructure

GIIA has provided an official response to the UK Government’s National Security and Infrastructure Investment Review. The consultation response follows a seminar, hosted by associate members KPMG and Ashurst, which was held the day after the launch of the Green Paper in October 2017.

The response sets out the key principles which GIIA believes should guide the Government in developing its proposals further. This includes support for a mandatory review regime for deals that may be deemed of interest to the Government from a national security perspective. In GIIA’s view, the mandatory regime would establish greater certainty for investors.

Commenting on the response, Jon Phillips, Director of Corporate Affairs at GIIA, said:

“At a time when the UK is seeking to redefine its trading relationship with Europe and the rest of the world, it must remain consistent with its objective to remain open for foreign investment. That is why it is so important that open dialogue continues so that the Government can adequately consider the risks arising from proposed changes and any potentially adverse effects to foreign direct investment.”

Click here to see the full submission

Recycling our Infrastructure for Future Generations

GIIA welcomes the publication of this report from the World Economic Forum, titled ‘Recycling our Infrastructure for Future Generations’. The report takes a closer look at an emerging approach to financing new infrastructure, also known as ‘Asset Recycling’.

Andy Rose, CEO, who was part of the steering committee for this publication, said “We hope that stakeholders around the world will take the time to read the report.”

Please click Recycling our Infrastructure for Future Generations for the full report

GIIA members signal openness to invest in Europe amid protectionist concerns

The renewables sector (solar, wind and biomass) and digital infrastructure are the two most attractive opportunities for investment over the next three years, according to a selection of GIIA members who gathered in London to discuss future trends and impacts on European investment strategies.

When asked about their geographical priorities, the investors saw the Nordic region, Germany, Spain/Portugal and the UK as the most attractive destinations for future investment in infrastructure.

Whilst investment sentiment remains largely positive and optimistic about the future, concerns were raised that the flow of investment capital could be under threat. Private investors think that potential protectionist policies are their most significant concern over the next 36 months.

The seminar, hosted by GIIA members Ashurst and KPMG, was held the day after the launch of the UK government’s Green Paper on National Security and Infrastructure Investment.

Commenting on the findings, Andrew Rose, CEO of GIIA said:

“Whilst our membership is positive and proactive about the future, there are increasing concerns.  Protectionist sentiment is on the rise in Europe and the infrastructure investment gap will not get filled without Government and private investors working together. GIIA is committed to open dialogue with Governments to find constructive ways to help deliver world class infrastructure that will benefit users of those assets.

“We welcome the specific opportunity to provide helpful and open feedback to the UK Government as it seeks to review powers related to national security infrastructure. It is absolutely critical that we respond to their calls for evidence and engagement, and make the case for private capital.”

‘Stable, transparent and predictable policy regulation drives investment’ GIIA tells OECD workshop on green investment

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GIIA CEO Andy Rose joined a high profile panel at the OECD’s workshop on Financing Green Infrastructure on 3rd November, and his message to the international audience was clear: “if Governments put in place stable, transparent and predictable policy and regulation then international investment will deliver the low emission, carbon resilient infrastructure the G20 requires.”

After an opening address by the Special Counsellor to the Secretary-General, OECD, panel members discussed the ambitious targets for decarbonisation under the Paris Agreement. The event was attended by a combination of more than fifty OECD country representatives, utility companies and financial institutions.

GIIA urges strong statement of intent from UK Government

The UK Government should use the Autumn Statement to clarify its intent toward foreign investment in UK infrastructure, urges GIIA’s CEO Andy Rose.

In an interview with the Mail on Sunday, (2nd October 2016) Andy pointed to the current levels of uncertainty facing investors in the UK.

“Delays to large infrastructure projects already in the pipeline, the recent announcement to review rules on foreign ownership of critical national infrastructure and talk of a new international trade strategy have combined to create unusual levels of uncertainty in the UK.  In isolation, these issues might be understandable but when viewed together, the UK is in danger of sending the wrong message to those that stand ready to invest £ billions in vital UK infrastructure.” Said Rose.

He continued: “When international infrastructure investors are considering where to focus their activities they are seeking stable government policies, a clear pipeline of projects and reduced barriers for investment.  Many of GIIA’s members could have a crucial role to play in delivering the international investment the UK needs in the post-Brexit world. We look forward to working collaboratively with UK Government to help create the right environment to deliver this”.

Infrastructure Investors Key for Post Brexit Britain

giia-768x568Global investors in infrastructure have a vital role to play in post-Brexit Britain. That was the message from Lord Hill to an audience of many of the world’s leading investment funds who met in the City of London on 5th October.

In a fascinating personal insight into the politics and Politics of the forthcoming Brexit negotiations, the former EU Commissioner emphasised the importance of Britain demonstrating to the world that it was open for business by setting out a new programme of infrastructure investment. But he urged investors to make their case to Government sooner rather than later.

With the timetable for triggering Article 50 now clear, Lord Hill said that business had a small window in which to ensure that the UK Government understood their requirements as it developed its future strategy and negotiating mandate. And he concluded by saying that whatever the outcome of the negotiations, business needs certainty in order to plan ahead.

“We were honoured to have the opportunity to hear directly from Lord Hill on his unique insights into the issues and challenges facing the counterparties in the forthcoming negotiations. Many of our global members have already invested billions of pounds in UK infrastructure that has seen vast improvements to our transport system, our utilities and our renewable energy supply. There is an appetite for further investment in the UK but the Government needs to understand the role it can play to reduce uncertainty and remove unnecessary barriers. We look forward to that dialogue.” said Andy Rose, GIIA’s CEO.

GIIA adds to executive team

jp-head-shot-colour-150x150Jon Phillips joins as Director, Corporate Affairs with a brief to develop GIIA’s communications strategy and to extend its membership base and events programme. He was previously Communications Director for the Nuclear Decommissioning Authority, a UK government agency established in 2005 to run the £3 billion a year nuclear clean-up programme. Prior to that, Jon spent 12 years at airport operator BAA Heathrow which included leading on communications for the £4.2 billion T5 project during its planning and construction phases.

Philip Elsen joins as a Policy & Research Intern. Philip graduated from Durham University in 2015 with an MA in International Relations and has recently completed an internship at Aberdeen Asset Management.