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UK unveils infrastructure spending plans

The government has recently unveiled its National Infrastructure Plan (NIP) outlining spending plans for the next twenty years with the aim of financing long-term sustainable growth. Anderselite are considering the impact of this news, which includes investment to cover developments, improvements and maintenance of the key infrastructure standards energy, transport, communications and water.

While the announcement was met with the expected challenges and criticism of the opposition, they were further boosted by announcements from the insurance industry on their own investment ambitions for infrastructure developments.

The announcements are welcome news to the construction sector which is already showing signs of a recovery with their highest output for six years recorded in November. Construction sector growth has included a rise in housebuilding which has seen developments grow at their fastest pace since 2003. 
 

What will the plans involve?
The National Infrastructure Plan will aim to establish 646 projects, of which it is claimed that 291 are already underway. These projects will cover all areas of the built environment from onshore and offshore to underground and over ground. This should be welcome news for both the construction industry as well as the UK economy as a whole.

There will also be projects involving wireless internet infrastructure to boost the UK's online and digital capabilities. Much has been made of the inclusion of property in the project plans both from government initiatives and from the private sector investors.

How much is going to be invested?
The plans include £375bn of investment which will be financed in part through the sell off of assets such as the government's 40% stake in Eurostar. The investment does not include any new money being injected into the plans. The amount being invested into infrastructure projects has been criticised for being too little and data released by the Office for National Statistics showed that there was a 10% drop in infrastructure work in 2012. However, at the same time that the government announced its National Infrastructure spending plans it was announced that between 2013 and 2018 the insurance sector is also set to invest £25bn.

Who else is planning to fund infrastructure developments?
Changes in European legislation have seen the emergence of new investors in the UK's infrastructure most notably this year with the announcements of investment plans from a group of six of the major insurance companies. Much of the insurers investments will contribute to property building and major player Prudential has already been seen to invest £40bn in such schemes. Other insurers keen to develop construction and property infrastructure include Legal & General, which has already spent £3bn over two years which has included the building of university accommodation.

How will these plans benefit the UK?
Over the years infrastructure spending plans have been met with scepticism and criticism as progress has been seen as being too slow, or in some instances for failing to get off the ground. The Royal Institution of Chartered Surveyors (Rics), called for the government to make regional transport infrastructure a priority area for investment.

To improve local transport systems would facilitate the movement of people, products and services and thus make areas a more attractive prospect for economic investment. There are many areas of the UK set to benefit from the newly announced planned spending including Gatwick Airport's rail station, a North Wales nuclear power station, a London Underground extension out to Battersea and a number of improvement works to major road networks up and down the country.

The challenge now will be for the government to set the wheels in motion to get these projects up and running and delivering a return on this economic investment.
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