November 14, 2016
Almost half of firms (44 percent) believe the UK’s infrastructure has improved over the past five years, but only a quarter (27 percent) think it will pick up in the next five years, and two thirds (64 percent) suspect it will hamper the country’s international competitiveness in the coming decades, according to the 2016 CBI/AECOM Infrastructure Survey. Delivery of key projects already in the pipeline emerged as the top priority among the 728 firms surveyed. Delivery of £38 billion of investment in the rail network through Control Period 5 (99 percent of respondents), and £15 billion of investment in the UK’s motorways and A-roads through the Road Investment Strategy (97 percent of respondents) rank highly, as does delivery of a new runway in the South East (85 percent) & HS2 (80 percent). Many firms have specific concerns about teh country’s digital infrastructure including the ability tow work on teh go on trains and elsewhere.
The Government’s recent track record has encouraged firms, according to the report. Infrastructure has become a core part of the country’s long-term economic agenda since 2010, and 42 percent of firms see the policies undertaken since the start of the 2015 Parliament – like the creation of Transport for the North – as positive steps.
However, confidence that overall infrastructure will improve in the coming five years has fallen 16 percentage points since the 2015 Survey (from 43 percent to 27 percent). A significant majority of firms are not optimistic that infrastructure in aviation (74 percent), energy (73 percent) and roads (69 percent) will improve, with only digital bucking the trend (59 percent of companies expect improvements in this area). Moreover, the majority (64 percent) of firms feel the UK is unlikely to be more internationally competitive in 2050 than it is now, and 46 percent are dissatisfied with the current state of their local infrastructure.
To secure delivery of the most important projects, Britain’s biggest business group, and the global infrastructure services firm, AECOM, want to see the Government reaffirm spending plans and press ahead with implementing policy decisions to ensure projects are delivered in full over the course of this Parliament.
Nearly every business surveyed (96 percent) says more reliable and robust digital connections – for fixed-line and mobile networks – is critical or important
Three quarters of firms (75 percent) see the UK’s digital networks as having improved in the last five years, with over half (59 percent) expecting them to improve further still in the next five years
But, a third of businesses (32 percent) say their current fixed-line broadband doesn’t meet their needs, and one in five SMEs report they don’t have the best connection available to them.
As a key driver of productivity and regional growth, digital infrastructure is critical to firms up and down the country. The CBI would like the Government to prioritise the roll out of quality, business-dedicated broadband, alongside consumer broadband.
Just over a quarter of businesses (27 percent) expect aviation connectivity to improve over this Parliament. The devolved nations are more positive, with 61 percent of firms in Scotland and Wales anticipating better connectivity
However, 73 percent of firms are not confident that a new runway in the South East will be built. Almost half of all firms (46 percent) expect to lose business if the UK doesn’t increase its flights with emerging markets, rising to 88 percent for multinational firms
70 percent of firms see faster road and rail access to the UK’s airports as critical or important, and 59 percent think the same about more resilient airport infrastructure.
Nearly three quarters of firms (74 percent) – and four fifths of manufacturers (81 percent) – see improved security of energy supply as a critical or important long-term goal for their future operations
This is followed closely (71 percent) by the need for greater investment in energy efficiency
66 percent of respondents are confident about security of supply for the rest of this Parliament, but only 27 percent feel the Government will take steps to improve the longer-term outlook
59 percent of infrastructure providers in the energy sector are dissatisfied with the Government’s energy policy framework to boost investment
Over four fifths of businesses (83 percent) aren’t confident in the UK’s ability to meet the requirements of the Paris Climate Change Agreement (COP21).
The ability to work on the go is vital for firms, with 75 percent saying their top rail infrastructure priority is better digital connectivity, such as WiFi and 3G or 4G, on board trains
But over half (59 percent) of businesses believe rail infrastructure won’t improve over the course of this Parliament
Turning to Control Period 5, half (50 percent) of all respondents are dissatisfied with the delivery of the programme so far. 74 percent of infrastructure providers working in the rail sector are not confident that Network Rail can deliver the rest of CP5, whilst only 32 percent of them believe the industry has the capacity to do so.
Nearly all firms (97 percent) see deliver of the Road Investment Strategy (RIS) as important to the UK’s future economic growth. But almost three quarters of infrastructure providers (71 percent) aren’t confident that Highways England has the capacity to deliver the RIS, whilst 56 percent believe industry also lacks the capacity
With RIS 2 already being developed, 75 percent of businesses see integrating the road network with other forms of transport – such as rail, ports and airports – as critical or important
73 percent of companies see tackling congestion as critical or important to the future operation of their business.
Only a quarter of respondents (26 percent) from regions and devolved nations are satisfied with the quality of their infrastructure, and close to half (46 percent) are dissatisfied.
40 percent of London firms are satisfied with their infrastructure. 36 percent of Scottish firms, 28 percent of Yorkshire and Humber firms, 21 percent of North East firms, 15 percent of Northern Irish firms, and only 8 percent of Welsh firms feel the same way. This falls to 5 percent among firms in the West Midlands
Firms’ concerns about infrastructure vary by region.
Connectivity is most critical for North West firms (70 percent)
Capacity is most critical for London firms (60 percent)
Resilience is most critical for Welsh firms (51 percent)
Cost is most critical for Northern Irish firms (40 percent)
Almost half of firms (47 percent) believe devolution will improve infrastructure in their region. However, this is a 14 percentage point decline on the 2015 Survey (61 percent), indicating a fall in confidence.
Businesses in the Northern Powerhouse are the most positive, such as the North West (76 percent), Yorkshire and Humber (73 percent) and the North East (63 percent)
Companies in the devolved nations are less optimistic, with Scotland (36 percent) and Wales (31 percent) below the national average
The most critical barriers to improving local infrastructure in the regions and devolved nations are a lack of central government appetite for investment (38 percent), a lack of a clear strategic plan for the region (38 percent) and a lack of local leadership (37 percent)
Planning and delivery
Infrastructure providers are positive about the impact of current policies on the UK’s infrastructure, with the aviation sector being the most positive (54 percent) and the energy sector the least upbeat (32 percent)
But two in five infrastructure providers (40 percent) are dissatisfied with the current business environment for delivery
68 percent of firms believe that setting out a long-term plan is a critical function of the National Infrastructure Commission. 54 percent believe that it is critical the UK’s infrastructure is more joined up.
Close to nine in ten infrastructure providers (86 percent) are concerned that current skills shortages will hamper the UK’s ability to deliver its current infrastructure pipeline. Digital providers are the most concerned (91 percent)
Meanwhile, 79 percent of infrastructure providers are engaged in apprenticeship training, but this drops to 40 percent among SMEs
The impact of the Apprenticeship Levy on the sector remains unclear, with over half of infrastructure providers (53 percent) anticipating it leading to more apprenticeship places, but a third (30 percent) reporting they will have to cut back non-apprenticeship training.
Only a quarter of infrastructure providers (26 percent) are satisfied with the current access to finance or funding
Infrastructure users are willing to look at alternatives to government funding, with over half of all firms (59 percent) open to greater private financing models for the road and rail networks and 54 percent happy to move to wider use of a user pays model.
Carolyn Fairbairn, CBI Director-General, said: “Infrastructure is a key driver of productivity and living standards. Day in, day out, Britain’s businesses rely on our roads, railways and runways to move their goods, services and people up and down the country. Firms give the Government a good report card on infrastructure, and are pleased with its commitment in recent years to put infrastructure at the heart of its long-term economic agenda. But announcements and commitments are one thing. Seeing tarmac, tracks, and super-fast internet cables being laid is another. It isn’t right that nearly one in two firms are dissatisfied with their region’s infrastructure, or that confidence in the future is running low, especially when it comes to delivery, the key piece of the infrastructure puzzle.
“So, our message is a simple one: at the end of the day, delivery is what matters. It’s great the Government is taking the decisions for our long-term future prosperity, like giving the green light to the new runway at Heathrow, Hinkley Point and improving digital connections. Businesses also need clear, deliverable timetables for action on major national projects – like Control Period 5 and the Road Investment Strategy – in order for them to act as magnets for investment, growth and jobs. If we don’t get spades in the ground on existing plans, it’s clear we could put a major dent in the competitiveness of British business – and the UK itself. This is something we cannot afford to do, especially during this period of uncertainty as the UK leaves the EU. Firms are ready and willing to work with the Government to develop the skills and capacity to deliver on plans.”
Richard Robinson, Chief Executive – Civil Infrastructure, Europe, Middle East, India and Africa, at AECOM, said: “As the UK plans for post-Brexit scenarios, the role of infrastructure is more vital than ever. Competing more directly on the global stage requires strong foundations to secure the nation’s international standing. Developing truly world-class national infrastructure is therefore of paramount importance. It will enable British industry to innovate, expand and flourish, strengthening the UK’s reputation as a good place to do business. High-profile, transformational projects such as HS2, Hinkley and Heathrow are vital but must not be prioritised to the detriment of the Highways England and Network Rail schemes that keep our country running.
“At a time of uncertainty, clarity around infrastructure investment and delivery will boost business confidence. The UK has a long history of successful major infrastructure projects, leading the world in creating innovative new delivery models. Schemes such as Crossrail and Tideway are beacons of best practice around the globe. Fortunately the UK has moved on from the era of under-investment in infrastructure. Since the start of this decade we have seen a revitalised commitment to infrastructure investment and its transformative power. The focus now must be on delivery.”