London model for infrastructure

What is needed to develop London’s infrastructure?

Despite the lack of space London continues to add on average 120 000 people to its population each year. This may be putting pressure on the city’s housing capacity, but the more urgent need is to develop a more effective infrastructure.

While there are many projects in the pipeline such as Crossrail and Highways England’s smart motorway projects, analysts predict if the annual population continues to grow at current rates, even these new developments won’t be enough to deliver efficient transport in and around the city. Utilities will also be placed under strain, energy supply and telecommunication in particular having to deal with an exponentially rising demand for efficient services.

How can the city of London hope to deliver the infrastructure needed, especially amid the current political turmoil and economic uncertainty? One thing in its favour is that the city has already managed to finance a number of key projects through the private sector – namely the Thames Tideway – thereby providing a blueprint for other projects to follow.

While traditionally avoided because private financing is more costly, the efficiencies achieved in project delivery are more than making up the difference. Contractors are not held up in red tape waiting for decisions to be made by committees so that financing to be released. There is also an incentive for them to deliver on shareholder and investor expectations, which improves productivity.

Could this be the future of infrastructure development in the UK? A combination of public and private sector financing has a far better capability to deliver on infrastructure than government alone. There is also the benefit of transferring some of the risk to the private sector.

Having said this, the current economic climate and ongoing uncertainty regarding Brexit isn’t exactly attracting investment, so infrastructure projects will have their work cut out for them if they want to attract private funding. Many potential investors are adopting a wait and see approach while others are looking to Europe as an alternative.

Tesla recently announced that they would be building a new gigawatt facility in Germany as opposed to the UK, precisely because of Brexit. This project could have contributed significantly to the UK’s renewable energy sector and has been a blow to the British economy and construction sector.

One thing in it’s favour is that the City of London has been proactive and progressive in implementing new emissions laws and embracing circular economy principles. It’s certainly a step in the right direction, but will it be enough?