As the Government seeks to pull Britain out of an economic tailspin, there is widespread consensus that 'greening the recovery' should be a key policy priority. The delivery of new infrastructure - already a high priority for the Government pre-crisis - will need to form a major component of any recovery. But how can this infrastructure be financed and delivered most effectively?
The findings of this report, informed by a recent private SMF roundtable of experts, politicians and sectoral representatives, offer up recommendations of how the UK Government can tackle both the existing “infrastructure deficit” and weather the economic storm of COVID-19.
- A cross-party commission with an independent chair should be created to establish a “strategic vision” of the UK’s infrastructure needs over at least the next decade.
- Politicians seeking to attract more private investment in infrastructure need to do more to shape public opinion. Stronger arguments for the local benefit of infrastructure – and a public willingness to take on local doubts – would help allay investors’ concerns about risk. Ministers should also explain why private profit from public infrastructure is not a flaw of policy but a necessary condition of investment.
- The Infrastructure and Projects Authority should be reviewed with a commitment to reestablishing the Major Projects Authority if the current arrangements are found to be inferior to previous structures.
- New funding models are needed to allow private investors to take on the task of operating infrastructure projects. Government should be ready to use public money to provide “development capital” for innovative infrastructure projects which look to utilise new technologies. This public spending should be administered by a new UK institution to replace the European Investment Bank.
- Urgent pension reforms should be undertaken to give Britain fewer and larger pension funds with the scale required to make major infrastructure investments. Learning from Australia and Canada, the UK should pursue a strategy of creating large “superfunds” able to invest in large illiquid assets.
This project was sponsored by Tidal Power Ltd. The SMF retains full editorial independence, takes no view on tidal power, and publishes the names of all its financial contributors.