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UK PM champions private capital for infrastructure

Gaurav Sharma 22/11/2011 The UK needs to leverage the power of the private sector to reshape the rules, break decades of failure and build world-class infrastructure in order to support a world-beating economy, according to UK Prime Minister David Cameron. Making the economy and infrastructure investment the central planks of his speech to industry lobby group Confederation of British Industry (CBI) yesterday, Cameron said his administration would not be pulled into wasting money on vainglorious projects that no one needs. The key, according to Cameron, lies in specifically targeting initiatives and projects that would “genuinely” lift the productive output of the country. Five target sectors for private funding could be roads, rail, ports, power and superfast broadband infrastructure.

UK Prime Minister David Cameron make his infrastructure pitch to the 2011 CBI conference © Gaurav Sharma, London 2011

Despite constraints on the public exchequer and a pressing need to cut the UK’s deficit, Cameron reiterated his promise to protect capital spending. “We’re building Crossrail – the biggest engineering project in Europe. We’re planning HS2 and the Francis Crick Institute (the biggest centre for biomedical research and innovation in Europe) is being built,” he told conference delegates. However, he admitted things were less than perfect and that more needed to be done. He revealed that over the coming week, UK Chancellor George Osborne would be setting out the next stage of the Government’s plan to “transform” the nation’s infrastructure.

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“This won’t be done with more government borrowing, but by using all the other tools at the Government’s disposal (including capital infusion but also leveraging the power of the private sector) to take a more strategic and proactive approach to infrastructure. That’s something this country has long lacked,” he added. Cameron also said the country’s plans for special economic enterprise zones were inextricably linked with infrastructure investment. “There can’t be one without the other,” he said in response to a question. However, Cameron said he was not interested in ideological arguments about intervention versus laissez faire, but rather in a strategy that works. “Everyone agrees now that the UK economy had become lopsided – too dependent on debt, consumption and financial services,” he added. In order to achieve a rebalancing act, Cameron said that business and infrastructure investment would be crucial. “To back offshore wind energy, we’re investing in ports, reforming our electricity market, and I am personally on the phone to the heads of Siemens, Gamesa and other major turbine manufacturers to get them to invest in the UK,” he added. The Government, Cameron said, would support and strengthen sectors where the UK currently lacks capacity, especially in the rail industry, referring to the current example of Bombardier. “This means investing in long term relations with our suppliers so they win orders – just as the private sector does and other countries do in Europe,” he concluded. Following Cameron's statement, attention immediately shifted to what the UK Chancellor will say in his autumn statement. A source close to the Treasury suggests that housing and infrastructure are likely to be key themes in Osborne's statement. Speaking to the reporters, CBI director-general John Cridland said, “Mr Cameron made clear that within one week, when the Chancellor makes his autumn statement, we would have a new strategy for infrastructure, which will aim to leverage private sector balance sheets to stimulate growth.” The statement is expected on Tuesday 29 November.

This report was first published by Infrastructure Journal on Nov 22nd, 2011.

All content © Copyright 2010 Emap Limited, all rights reserved.