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UK - Businesses say infrastructure is inferior to EU rivals

09 September 2011

The government must act now to attract vital new investment into the UK's ageing infrastructure. 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 Confederation of British Industry (CBI) said today.
 
A major new survey of 477 businesses, conducted in partnership with financial services firm KPMG, shows that 58% rate the UK's infrastructure worse than other European Union (EU) countries, when judged on quality, value for money and reliability. And worryingly, just 26% of firms saw the UK as a favourable destination for infrastructure investment.

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

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, commented "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."

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. 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."

Today's report, called Making the right connections: CBI/KPMG infrastructure survey 2011, assesses the state of the UK's infrastructure and highlights how critical quality infrastructure is to companies' decisions about where to invest and their ability to compete.

Half of companies think the UK's transport network has got worse in the last five years, while 18% say it has got better. Nine in ten express concern about the security of energy supply over the next ten years.

The link to sustained economic recovery is clear, as the survey shows, 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 200 billion Pounds 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."

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. 43% think its policies will have a positive impact, while 33% feels they will be negative. 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'.

98% see the current planning system as a barrier to the development of new infrastructure, and 69% say it is a significant barrier. 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.

The CBI has formed an Infrastructure Board, comprising CEOs and Chairs from across the international infrastructure supply chain. The board will be chaired by Mark Elborne, President & Chief Executive of GE UK and Ireland. It will help shape a future vision for the UK's infrastructure and policy decisions designed to deliver the resilient, reliable and smarter infrastructure the UK needs in the coming decades.

Other key findings in the CBI/KPMG survey include:

• 79% of firms are satisfied with links to EU markets, but they are far less happy with links to emerging markets, such as the Far East and South America. Just 59% think the UK's links to these countries are satisfactory, while 41% are dissatisfied.

• 65%) of businesses said Britain's local road network has deteriorated in the past five years.

• Commuter rail also got a 'thumbs down' from firms, with 46% feeling it has worsened and just 22% seeing improvement.

• 95% of respondents were concerned about the rising cost of energy in the next five years, and 89% were worried about the security of the UK's energy supply.

• The UK's digital infrastructure fared much better, with 73% of firms seeing improvement in broadband networks in the past five years. Waste and water services were also judged, on balance, to have improved since 2006.

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