Breadcrumb
The Spring Budget: GIIA’s asks of the UK Government
Ahead of the Chancellor’s 2024 Spring Budget, we highlight the core challenges facing infrastructure investors in the UK along with our recommendations to the Government.
The Spring Budget is an opportunity for the Chancellor to send signals that further build confidence amongst investors that the UK is a stable and attractive destination for private capital. This will help the UK to attract investment that secures its ambitions for infrastructure transformation and its ambitious targets for transition to net zero.
Ahead of next week’s budget, the GIIA highlights several key areas where policy intervention is required to unlock greater investment in the UK’s infrastructure:
Economic regulation
Investors welcome the government's review of economic regulation, particularly the consultations on ‘smarter regulation’. While these consultations hold promise, swift implementation is essential in order to influence forthcoming price review processes in vital sectors like energy and water. Failure to integrate the outcomes of these consultations would impede progress towards environmental objectives and overall infrastructure improvement.
Capitalising on contracts for difference (CfD) allocation rounds
While recent increases in administrative strike prices (ASPs) have been noted, further measures are necessary to ensure effective delivery of renewable projects aligned with the UK's net zero goals. Recent setbacks in offshore wind project bids underscore the urgency for action. The Government must ensure ASPs reflect market dynamics and promptly enact proposed adjustments outlined in consultations to drive progress in this critical area.
Review of electricity market arrangements (REMA)
The ongoing review of the UK's electricity market is crucial for aligning infrastructure with net-zero objectives. Delays in the REMA consultation release create uncertainty, hindering investment planning. Expedited progress in this review is necessary to provide investors with clarity and confidence in the future direction of the energy sector.
Carbon capture, utilisation and storage (CCUS)
Decisive action is needed to sustain investor commitment to CCUS projects. Accelerating final investment decisions (FIDs) for current projects and offering clarity on funding commitments for future projects are essential to demonstrate the UK's readiness to collaborate with private investors and achieve coherent CCUS strategies.
The UK as an investment destination
While recent measures have helped to stabilise the UK's reputation among international investors, more action is needed to regain the UK’s status as a top choice for investment. Swift implementation of recommendations from Lord Harrington's review of foreign direct investment (FDI) and consideration of international best practices for public-private partnerships (PPP) will enhance the UK's appeal to investors.
The Chancellor's Spring Budget offers a critical opportunity to reinvigorate confidence among infrastructure investors and solidify the UK's position as a leading destination for investment. Bold and decisive policy measures are needed to address key concerns and unlock greater investment in vital infrastructure projects.