U.K. Unveils €116 Billion Infrastructure Plan

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - The U.K. has revealed a €116 billion ($151 billion) spending programme for infrastructure projects which is designed to jump-start the country's badly hit construction and steel industry.

At the release of the government's Spending Review, Danny Alexander, the chief secretary to the Treasury, unveiled the massive infrastructure investment plan. The announcement is designed to boost the National Infrastructure Plan (NIP) which was launched in 2011, listing almost 600 projects with a total investment potential of €363 billion ($476 billion). The plan was backed by major government financing and guarantees to investors in order to get major infrastructure projects off the ground. Despite some progress, however, the Plan's implementation has being moving slowly. Reports show that less than a fifth of the almost 600 projects listed in the Plan have actually started and only seven - mostly road projects - have been completed.

Last week, Industrial Info wrote about the current state of NIP and how one the Top 40 projects, worth around €700 million ($920 million) was awarded to Spain's FCC (Madrid, Spain) to design, build, finance, maintain and operate the Mersey Gateway Bridge in Liverpool (UK). For additional information, see June 24, 2013, article - Major U.K. Infrastructure Project Awarded -- Many Others Stalled.

The announcement by Alexander will see more than €81 billion ($105.5 billion) of investment in transport, over €23 billion ($30 billion) in schools and €11.6 billion ($15 billion) in science, housing and flood defences.

"Today I announce the most comprehensive, ambitious and long-lasting capital investment plans this country has ever known," Alexander said launching the spending programme. "So we can guarantee £300 billion of capital spending by the end of the decade - today I can set out our plans for over £100 billion of this for the infrastructure of our country. This includes the the biggest public housing programme for over twenty years, the largest programme of rail investment since Victorian times, the greatest investment in our roads since the 1970s, fast online access for the whole country and unlocking massive investment in cleaner energy, to power our economy forwards."

The Engineering Employers' Federation (EEF), supported the announcements but highlighted political uncertainty in getting the plan implemented quickly.

"Today's announcement is another step forward in getting investment in key areas of infrastructure going," it stated. "The government has set out much greater clarity on its priorities. And its extension of Infrastructure Guarantees and greater use of commercial expertise should give industry more confidence that these plans will get delivered. But, the government needs to address the political uncertainty that has long dogged infrastructure decisions and find ways to generate cross-party agreement on our infrastructure priorities. And, with progress on Infrastructure Guarantees still slow, breaking the log jam on private funding needs urgent attention."

Road and rail projects will account for the bulk of the new infrastructure spending.

Alexander said: "In the last two decades, rail passenger numbers have doubled, and that figure is set to rise by nearly 15 per cent over the next five years. More people are using our railways than at any time since 1927. Last year we announced that Network Rail is being funded to deliver the largest programme of rail investment since the Victorian era. This is investment that will bring new life to our rail networks."

It will include High Speed 2, a huge high-speed rail project that will connect eight of the U.K.'s 10 biggest cities.

"It isn't good enough that the U.K. has just 68 miles of high speed railway, compared with over 1, 000 in Germany, and over 2, 000 in France," Alexander explained. "We want a High Speed Line that connects 8 of the UK's 10 biggest cities, making daily commuting between them possible for the first time. And so today we provide the long term financial certainty for High Speed 2, setting a funding envelope of £42.6 billion for construction costs and £7.5 billion for rolling stock."

Dr Nelson Ogunshakin OBE, Chief Executive of the U.K. Association for Consultancy and Engineering (ACE), welcomed the announcement: "Confidence has been significantly boosted by the government's moves to provide longer funding plans. This gives certainty to industry and investors over the long term, better fitting the cycle of infrastructure financing, planning and delivery. Industry has supported government's renewed focus on infrastructure, but so far this good intention has been undermined by the ability to deliver projects. We await further detail, but allowing the expertise of the private sector to drive delivery forward can make the difference in getting projects from plans to being built. Industry is keen to engage with Lord Deighton and wider government on these plans to get projects delivered efficiently and effectively, now and in the future."

Support for the government's plans was also forthcoming from the country's Civil Engineering Contractors Association (CECA).

"We called for extra investment in roads and rail, certainty in the government's energy policy, a new model for roads ownership, and commitment to commence development work on Crossrail 2," explained CECA's director of external affairs Alasdair Reisner. "Today's announcement confirmed all of these and more. It is vital now that we work with government to deliver this ambitious plan for the nation's infrastructure. This will enable the sector to drive growth in the economy, maximise efficiencies in the sector, and allow the UK to compete on the global stage."

The new spending will also see the additional of two lanes to the busiest motorways, resurfacing up to 3,700 lane miles of the national road network every year, the rebuilding of 261 of the country's worst schools by 2017 and €11.6 billion ($15 billion) in repairing and investing in existing schools. Other NIP spending will go boosting the energy infrastructure and building 165,000 'affordable' homes.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.