• Categories

£413bn UK infrastructure plan has “long way to go”, KPMG say

One of the UK’s big four auditors has said the UK government’s National Infrastructure and Construction Pipeline is meeting National Infrastructure Commission’s spending recommendations but more needs to be done to drive private investment.

KPMG say the pipeline is “gaining ground” with current forecasts currently at 1.5% of GDP – greater than the 1.2% recommended by the NIC. But more work was needed to “bridge the gap” between public and private spending with levels at 3.0% and below the recommended point of 3.7% of GDP.

The analysis shows that energy remains the biggest sector by spend, with £189bn in committed investment, although 73 per cent is allocated post-FY22. Transport is second with £123bn, followed by utilities at £47bn, with funds in these areas being allocated up to FY22. Other key sectors are housing and regeneration (£14.4bn), education (£14bn) and communications (£6.8bn).

The average infrastructure spend per capita is £907 across the UK. Based on a regional breakdown, this is highest in the South West (£26.6bn), North West (£21.4bn) and London (£19.8bn), and the lowest in the West Midlands (£5.3bn).

Commenting on the data, Jonathan White, KPMG’s UK head of infrastructure, building and construction, said: “The current National Infrastructure and Construction Pipeline stands at £413bn. With the forecast public pipeline currently accounting for 1.5% of GDP, it’s encouraging that this is greater than the 1.2% recommended by the National Infrastructure Committee, so let’s keep it up. However, total public and private spend combined currently stands at 3.0% and is, therefore, still below the 3.7% of GDP recommended by the United Nations Sustainable Development Goals. More investment is needed to help bridge this gap.”

However, a word of warning has been issued on the amount of money allocated to nuclear power stations, with specific reference to the development of Hinkley Point C and the decommission of four nuclear power stations in the north west.

KPMG’s infrastructure expert believes levels of spending in this sector “will be disappointing” for many while there remains a “pressing need for investment in transport and digital infrastructure”.

“Clearly, we’re seeing high levels of spend in energy, which is taking a sizeable share of the overall pot, although investment is largely earmarked for a longer time frame beyond 2022,” White added. “We know that the market will be looking to see how much of this investment will go towards greener ways of generating power to help meet carbon reduction targets.”

A final concern raised by KPMG is the fact how the current pipeline has one fewer year in it than the previous period analysed in 2017, and therefore fewer allocated funds. The company believes this format leads to value “falling out” as the five-year cycles of government departments and regulated utilities elapse and therefore makes the pipeline less valuable as a way of forecasting future spend for the construction industry.

Leave a Reply

You must be logged in to post a comment.