Blog | UKā€™s Autumn Budget acknowledges the need for private investment in infrastructure

With UK Government finances stretched to record levels as a result of the pandemic, private capital will be vital to achieving the huge levels of investment required to meet long-term strategic ambitions, such as Net Zero and the Levelling-Up agenda. On the eve of COP26, GIIA Policy & Research Executive Estela Bibiloni Diaz analyses how these priorities have been reflected in the Autumn budget …

The budget and spending review announced on 27tOctober has targeted some key infrastructure areas. The Government has committed to investing Ā£21bn on roads, Ā£35bn on railways, and Ā£6.9bn on transport infrastructure in cities outside London as part of the Levelling Up agenda. An additional Ā£1.4bn will go into the establishment of the Global Britain Investment Fund, which will support the development of emerging technology, particularly in the electric vehicle sector, and thus crowd in private investment. An additional Ā£1.7bn will go towards a new UK nuclear plant (widely expected to be Sizewell C).

Additionally, the UK Infrastructure Bank, with its role as a catalyzer of private investment, is off to a great start, having made the first commitment to the development of offshore wind infrastructure in the Tees Valley recently.

However, during the Budget announcement, Chancellor Rishi Sunak also acknowledged that ‘government action wonā€™t be enough to create a stronger economy’ on its own.

As COP26 approaches, this statement builds on the recently released Net-Zero Strategy, which estimates that Ā£90bn in additional private investment will be needed by 2030 if we are to achieve climate change targets. GIIA members are strongly committed to the achievement of the 2050 Net-Zero target and, over the last five years, have invested more than Ā£25bn to new green infrastructure projects to meet the energy transition, on top of Ā£63bn of investments already made.

In all, the Autumn Budget brings us one step closer to our goals in the allocation of public funding, and gives investors a better perspective on the plans of the Government.

What is now needed is a clear statement of intent to investors that the model of economic regulation in the UK will move away from a short-term focusĀ on bill reductionĀ and towardsĀ prioritisingĀ the investment that is required to meet existing and future challenges, while achieving a fair balance between cost and return.

Investors, therefore, look forward to the publication of the White Paper on Levelling-Up, the Regulation Policy Paper, which will set up the UKā€™s economic regulation environment for coming years, and the response of the Government to the Better Regulation Framework review.

TheseĀ announcements, alongside the already published Regulated Asset Base (RAB) model for nuclear, will set out the first steps towards achieving theĀ much-neededĀ clarityĀ that will helpĀ unlock the vast sums of long-term patient capital available from infrastructure investors.

GIIA looks forward to continuing working with the UK Government in achieving that regulatory stability and bringing into the conversation the voice of private infrastructure investors, who are keen to play their part in the transitionĀ to net zeroĀ by 2050.

GIIA welcomes new CBI report ‘Investing in Infrastructure’.

GIIA was pleased to contribute to the CBIā€™s new report titled ā€˜Investing in Infrastructure ā€“ Sourcing the Finance to Build Back Betterā€™.

We welcome the acknowledgement of the vital role that private investment plays in delivering the modern, efficient and socially responsible infrastructure needed for future generations and the 13 recommendations the report makes.

In particular GIIA welcomes those recommendations calling on the Government to provide more clarity around the role they see for private investment in delivering many of the nationā€™s major infrastructure projects.

Speaking on the release of the report, GIIA CEO Lawrence Slade said:

ā€œAt a time when Government spending is rightly focused on both the social and economic recovery from the coronavirus pandemic, the private sector has the expertise and innovative ideas, andĀ  stands ready to help address the UKā€™s long term infrastructure challenges while playing a significant role in the UKā€™s economic recovery.ā€

The full CBI report can be viewed here