Multiple governments have recognised the need for modern infrastructure, capable of delivering and enabling high performance across our country. As with many issues in the political sphere, ministers have taken it upon themselves to craft a ‘long-term plan’, currently entitled the National Infrastructure Delivery Pipeline.
I’ve got to admit, I’m a little sceptical of politicians rocking up to construction sites in hard hats and hi-vis jackets, but this increased focus on infrastructure is something I broadly welcome. Infrastructure drives economic growth, it creates jobs and has the potential to bring great improvements to lives across the country. It creates towns and cities, supports exports, keeps the lights turned on, lets us use our mobiles and computers, and provides protection against climate change.
As the country looks to our political parties for their manifestos, we face a greater than usual level of uncertainty over what the future holds. In the construction industry, there is rising concern that our self-inflicted skills crisis is going to result in many projects being undeliverable, either due to a lack of staff or their cost. In addition to this, concerns have been raised about the loss of something called ‘anchor investment’ which is received from the European Investment Bank.
In the world of financial markets, the term Anchor Investor is used to describe an individual or institution whose investment is considered as a positive signal for pursuing an investment. They’re generally offered investments well before general markets and their participation is marketing widely to boost popularity for an investment.
“If Warren Buffet is putting his money in, then it must be a good deal”
The UK is an internationally recognised provider of excellence in the design, delivery and operation of social and economic infrastructure. This success is due, in no small part, to our ability to deploy investment models that attract significant private investment. This investment is hugely significant for our economy (although I am sceptical of the desirability of Foreign Direct Investment), which I believe the be causing significant inequality within the country.
The risk of losing the support of the EIB is a real danger thanks to Brexit. Having invested more than €30bn in the UK between 2012 and 2016 – the majority of infrastructure – the institution provides vital support to the industry and is widely considered an Anchor Investor. The loss of backing could lead to a collapse in market confidence and prevent many vital projects from attaining adequate funding.
To come back to the issue of the skills shortage, I’ve recently read reports that estimate the UK needs an additional 36,000 infrastructure workers every year to meet current demand. Considering that 400,000 construction jobs were lost during the last recession and that more than 700,000 construction workers are due to retire in the next ten years, do we really want to risk losing up to a quarter of a million EU works from our labour market?
The impact of Brexit
Escalating labour costs and the shortage of qualified specialists have the serious risk of stopping infrastructure projects from being delivered. When combined with the risk of losing the support of the EIB, it seems to be more important than ever that whoever wins in the General Election takes serious steps to mitigate these risks if they are to have any chance of delivering the aspirations of the National Infrastructure Delivery Pipeline.
Ensuring that the workforce is correctly skilled in delivering the projects will require agreement from our Brexit negotiating partners, as well as serious investment in the future education and skills development offered by our educational institutions. Alongside this, ensuring that we remain members of the European Investment Bank will be essential – the Government might not appreciate the collapse in market confidence if their financial backing is lost.