The Government must act now to attract vital new investment into the UK’s ageing infrastructure, according to a new report from the CBI and KPMG. 

Swift investment across Britain’s road and rail networks, digital, waste and energy would ensure we remain internationally competitive and kick-start UK growth, the CBI said today in the report, Making the right connections: CBI/KPMG infrastructure survey 2011. 

The survey of 477 businesses, conducted in partnership with KPMG, shows that 58% rate the UK’s infrastructure worse than other EU countries, when judged on quality, value for money and reliability. Just 26% of firms saw the UK as a favourable destination for infrastructure investment. However, Waste and water services were judged, on balance, to have improved since 2006.

Last year’s World Economic Forum Global Competitiveness Report placed the UK 33rd for quality of infrastructure, alongside Slovenia and behind Tunisia and Cyprus, while competitors France and Germany both made the top ten.

Government must raise its capital investment

The CBI is calling for swift action to help secure critical business investment and urges the Government to raise its capital investment to pre-recession levels as soon as possible.

John Cridland, CBI Director-General, said:

“This survey paints a disturbing picture. Firms across the country say that the infrastructure they depend on every working day is just not good enough and is stifling growth. High quality infrastructure swings boardroom decisions when companies are looking where to invest, and pays dividends in terms of future jobs and growth.

“The UK is still a long way down the international infrastructure league table and languishes behind key competitors. So, if we are serious about boosting exports - especially in emerging markets - and achieving sustainable growth, the Government must put infrastructure investment firmly at the top of its agenda.

“We need ministerial decisions that get spades in the ground and people working now. There are large amounts of business capital waiting to be unlocked if the Government achieves a step-change on transport, for example with the introduction of road tolls. Capital investment must return to pre-recession levels at the earliest opportunity."

Water CEOs on new CBI Infrastructure Board

Mr Cridland went on to announce the formation of a new CBI Infrastructure Board of leading CEOs and Chairmen, led by Mark Elborne of GE. Members include Jean-Dominique Mallet CEO, Veolia Environmental Services (UK) and Heidi Mottram CEO, Northumbrian Water.He said:

“I have asked the Board to produce a compelling new framework for the speedy delivery of resilient, smarter infrastructure, which will help restore the UK’s competitive edge in the years ahead.”

Half of companies surveyed think the UK’s transport network has got worse in the last five years, while less than a fifth (18%) say it has got better. Nine in ten express concern about the security of energy supply over the next ten years. Most companies rank the quality and reliability of energy (81%) and transport (81%) infrastructure as significant or very significant to future investment decisions.

The Government’s own National Infrastructure Plan acknowledges that £200bn of infrastructure investment is needed in the next five years alone, with 70% expected to come from the private sector.

Richard Threlfall, KPMG UK Head of Infrastructure, Building and Construction, said:

“This survey provides further evidence of the UK’s infrastructure challenge.

“Businesses rate the UK’s infrastructure unfavourably compared to EU competitors on cost, quality and reliability. The quality of transport emerges as a particular concern as well as the outlook for energy security and costs.

“Businesses are clear about the solutions needed – a clearer strategy from Government, faster planning approvals and less red tape. A lot now rides on the Growth Review and the update of the UK Infrastructure Plan due in the autumn.”

Current planning system a barrier to new infrastructure

In the survey, firms gave the coalition Government a mixed report on its policies to attract infrastructure investment and deliver the necessary improvements to our networks. Over two-fifths (43%) think its policies will have a positive impact, while a third (33%) feels they will be negative. A quarter (24%) says they will have no impact at all.

According to the survey, what businesses want most from the Government is a clear overall strategy. Next on their list is action to tackle delays and costs in the planning system. Their third highest priority is reducing regulation and ‘red tape’.Almost all (98%) see the current planning system as a barrier to the development of new infrastructure, and 69% say it is a significant barrier.

Waste and water services were judged, on balance, to have improved since 2006.

Among infrastructure providers, this rises to 76%, with 79% of construction firms and 85% of energy companies saying the planning system is a hurdle to development.