Listen to a recording of the keynote speeches from this roundtable
Infrastructure and its importance to growth have been at the heart of the political agenda in recent weeks. In this context, Prospect’s roundtable, titled “what infrastructure should the UK build?” was particularly timely. Held on Tuesday 1st July, it came after high profile announcements on the subject by both the government and the opposition, as well as a rising debate on whether cities should have more powers over spending—and raising—money.
The discussion, hosted at the offices of the Local Government Association (LGA) and supported by guarantor Assured Guaranty, set out to address the difficulty in planning and funding for major regional infrastructure projects.
The group of 16 specialists from local government and the investment sector participated in an extremely lively and involved discussion. The panel expressed some shared frustration at the hesitation of central government in approving key projects in transport, energy and housing, as well as its unwillingness to open up greater funds to the local and regional bodies that, they argued, best understand the needs of their area. In doing so, they raised questions about the commitment of central government to competition, and what kind of democracy Britain now wants or needs.
Nick Proud, Senior Managing Director of Assured Guaranty, spelled out the “story of frustration” experienced by his firm and others in the sector who finance such projects. The money was there, he argued; the obstacle has been lack of political will. While he was pleased that Assured Guaranty had completed three local authority housing transactions in the past year, he stressed that these projects had been “in the pipeline” for many years. “My message to the room is that investor support is there,” said Proud. He said such support was thwarted by a lack of product flow and by state intervention like lending by the European Investment Bank, which he says provides taxpayer-subsidised capital that could be found from other sources such as pension funds and life insurers.
The problem, as laid out by Sir Merrick Cockell, then chairman of the LGA, and David Hodge, leader of Surrey council and chair of the People and Places Board, is a lack of ambition, imagination and long term planning in government thinking about infrastructure. As Hodge pointed out, responsibility for infrastructure projects is spread over six or seven government departments, which can lead to confusion and short-termism. “What we need is for the government to get a grip of what infrastructure the country needs over the next 25 years,” said Hodge.
Within the discussion that followed, some panellists referred to the example of Scotland, which enjoys more devolved powers than England and has a Cabinet Secretary for Infrastructure and Capital Investment. The point was made that devolution not only frees up regions to make their own choices, but also instills them with a new sense of responsibility. The discussion also took in the question of Britain’s unusually complex planning and funding processes, which some attendees warned was leaving us increasingly behind European competitors.
There was no clear consensus on the solution to Britain’s infrastructure crisis, but several key points emerged. Many panellists felt that pension funds should be mined for infrastructure funding: Merrick Cockell pointed out that the Local Government Pensions Scheme has £178bn of funding across 89 funds, very little of which is dedicated to infrastructure. David Hodge ambitiously called for the creation of an infrastructure department within government, which would bring disparate projects together, improving organisation and accountability.
Peter Rankin, leader of Preston City Council, spoke about his city’s pioneering “city deal,” which allows them the freedom to spend over £400m as part of an infrastructure investment fund. This draws together a range of local and national funds to create a co-ordinated ten year spending plan. Rankin said the fund not only provides certainty to the private sector, but also gives the council a chance to demonstrate to central government that it is best placed to solve problems specific to its area. His example provides a template for other councils looking to commit to major development plans.
Some panellists said they still felt depressed at the end of the discussion, and the point was made by many that a democracy in which local figures cannot be properly held accountable for local decisions was in many ways a limited democracy. But Prospect’s Bronwen Maddox was more optimistic. While acknowledging the seriousness of the problems expressed in the session, she raised the question of “whether we might be talking more cheerfully in three or four years’ time.” The recession has been long and hard, but cross party commitment both to infrastructure and to the regions, coupled with the ingenuity and passion of local government and investors, could give cause for optimism in the coming years.
Infrastructure and its importance to growth have been at the heart of the political agenda in recent weeks. In this context, Prospect’s roundtable, titled “what infrastructure should the UK build?” was particularly timely. Held on Tuesday 1st July, it came after high profile announcements on the subject by both the government and the opposition, as well as a rising debate on whether cities should have more powers over spending—and raising—money.
The discussion, hosted at the offices of the Local Government Association (LGA) and supported by guarantor Assured Guaranty, set out to address the difficulty in planning and funding for major regional infrastructure projects.
The group of 16 specialists from local government and the investment sector participated in an extremely lively and involved discussion. The panel expressed some shared frustration at the hesitation of central government in approving key projects in transport, energy and housing, as well as its unwillingness to open up greater funds to the local and regional bodies that, they argued, best understand the needs of their area. In doing so, they raised questions about the commitment of central government to competition, and what kind of democracy Britain now wants or needs.
Nick Proud, Senior Managing Director of Assured Guaranty, spelled out the “story of frustration” experienced by his firm and others in the sector who finance such projects. The money was there, he argued; the obstacle has been lack of political will. While he was pleased that Assured Guaranty had completed three local authority housing transactions in the past year, he stressed that these projects had been “in the pipeline” for many years. “My message to the room is that investor support is there,” said Proud. He said such support was thwarted by a lack of product flow and by state intervention like lending by the European Investment Bank, which he says provides taxpayer-subsidised capital that could be found from other sources such as pension funds and life insurers.
The problem, as laid out by Sir Merrick Cockell, then chairman of the LGA, and David Hodge, leader of Surrey council and chair of the People and Places Board, is a lack of ambition, imagination and long term planning in government thinking about infrastructure. As Hodge pointed out, responsibility for infrastructure projects is spread over six or seven government departments, which can lead to confusion and short-termism. “What we need is for the government to get a grip of what infrastructure the country needs over the next 25 years,” said Hodge.
Within the discussion that followed, some panellists referred to the example of Scotland, which enjoys more devolved powers than England and has a Cabinet Secretary for Infrastructure and Capital Investment. The point was made that devolution not only frees up regions to make their own choices, but also instills them with a new sense of responsibility. The discussion also took in the question of Britain’s unusually complex planning and funding processes, which some attendees warned was leaving us increasingly behind European competitors.
There was no clear consensus on the solution to Britain’s infrastructure crisis, but several key points emerged. Many panellists felt that pension funds should be mined for infrastructure funding: Merrick Cockell pointed out that the Local Government Pensions Scheme has £178bn of funding across 89 funds, very little of which is dedicated to infrastructure. David Hodge ambitiously called for the creation of an infrastructure department within government, which would bring disparate projects together, improving organisation and accountability.
Peter Rankin, leader of Preston City Council, spoke about his city’s pioneering “city deal,” which allows them the freedom to spend over £400m as part of an infrastructure investment fund. This draws together a range of local and national funds to create a co-ordinated ten year spending plan. Rankin said the fund not only provides certainty to the private sector, but also gives the council a chance to demonstrate to central government that it is best placed to solve problems specific to its area. His example provides a template for other councils looking to commit to major development plans.
Some panellists said they still felt depressed at the end of the discussion, and the point was made by many that a democracy in which local figures cannot be properly held accountable for local decisions was in many ways a limited democracy. But Prospect’s Bronwen Maddox was more optimistic. While acknowledging the seriousness of the problems expressed in the session, she raised the question of “whether we might be talking more cheerfully in three or four years’ time.” The recession has been long and hard, but cross party commitment both to infrastructure and to the regions, coupled with the ingenuity and passion of local government and investors, could give cause for optimism in the coming years.
