Infrastructure funding UK Ellis Fox Blog

Where will infrastructure funding come from?

Infrastructure has been highlighted as one of the sectors that can be a catalyst to economic recovery. The government has set out ambitious plans to expand and improve on roads, rail, water, power and telecoms utilities and set aside billions in funding to kick start these projects. While this is welcome news, some industry experts are of the opinion that achieving the scope of the infrastructure projects proposed, will not be possible without private funding. Which raises a great deal of questions as to what realistic expectations should be.

Promoting infrastructure

One criticism is that there is little information made available on infrastructure investment possibilities. Investors overlook projects simply because they don’t know about them. If the government wishes to attract more private investment, a promotional campaign and forums for information sharing would certainly help the cause.

Financing structures

It has been suggested that one of the most effective way to finance UK infrastructure is to set up an Infrastructure Bank. This would be similar to financing instruments established in Asia to attract investment to infrastructure development. Channeling funds in this way could help streamline the process.

Industry data

There isn’t a great deal of infrastructure data that is made available to the general public and potential investors. This may well be one of the reasons that so many people are in the dark as to what is happening with regards to infrastructure development. Data on current projects as well as the future pipeline of projects paints a much clearer picture with which to evaluate the sector as an investment option.

Accountability

Many major infrastructure projects have a reputation for skyrocketing costs and endless project delays. This works against attracting potential investors. Clear management plans and project data will need to be made available to convince investors that their money won’t be at risk.

Public benefits

Many an investor may like the idea of being part of a major infrastructure project that is to benefit communities. Promoting these benefits can therefor play an important role in attracting finance. When there is a greater commercial benefit, such as linking commercial centres, this should be highlighted.

It is estimated that the financing gap for infrastructure projects for the foreseeable future is in excess of £400 billion. If infrastructure is to play it’s part in Britain’s economic recovery, a concerted effort will need to be made to attract and secure substantial private financing.