Ministers are under pressure to spell out how they intend to boost investment in infrastructure, with industry executives warning about a “lack of clarity from the government”.
Ministers are also hoping to announce a successor scheme to the private finance initiative funding structure to help build schools, hospitals and other public projects.
But an industry survey has found 60 per cent of respondents believed a “lack of clarity from the government” was the factor that most discouraged infrastructure investors in the UK.
That confusion was a far greater disincentive than other problems, such as lack of finance, poor regulation or procurement weakness, according to the survey of 200 investors by the Infrastructure Investor journal.
While respondents said the coalition had a more impressive approach to investment than the Labour government, optimism about whether its plans will work was underwhelming.
Andy Thomson, senior editor of the journal, said there was a lack of “unbridled enthusiasm” in the industry about the government’s “headline-grabbing initiatives”.
Ministers have been working for months to try to attract a target £20bn of pension fund money into new infrastructure through a “pension infrastructure platform”. But two-thirds of respondents thought the idea would “not make much difference” to the industry.
That echoes comments by Paul Morrell, the government’s chief construction adviser, who this summer told the FT that “there won’t be a barrel-load of funding coming in from pension funds for greenfield [new] infrastructure”.
Noble Francis, economist at the Construction Products Association, said ministers had failed to produce a model with “relatively safe payback” for private groups to invest in government projects.
While the coalition has pressed ahead with high-profile schemes including Crossrail and the Olympic Park, these were devised by the Labour government. A proposed high-speed rail line from London to the north will not be legislated until the end of the current parliament.
Meanwhile the government’s nuclear new-build programme is beset by uncertainty, with several investors thought likely to pull out if ministers do not offer sufficiently high subsidies.
Energy companies say their confidence to invest has also been damaged by government decisions such as the cut to feed-in tariff subsidies by more than half with just six weeks’ notice.
In the industry there is a growing sense of frustration that a decision-making hiatus is stifling progress towards building some of the £200bn of investment the government says is needed in the medium term.
George Osborne, the chancellor, is determined to put infrastructure at the centre of the coalition’s economic recovery plan and is co-ordinating cross-Whitehall work in several areas, most of which involve underwriting projects rather than spending money upfront.
In July he launched a “UK Guarantee” scheme intended to underpin £50bn of big projects such as the Thames “super sewer” tunnel and the Mersey Gateway toll bridge: the Treasury hopes to be able to announce more successful applicants later this year.
Separately David Cameron, the prime minister, is expected to announce a housebuilding drive in September that will feature guarantees on housing association bonds as well as a relaxation for private housebuilders on how many “affordable” homes they have to build.
Mr Osborne also hopes to unveil a PFI successor in the autumn, although those familiar with the Treasury’s thinking believe it may not look much different to the old scheme.
Meanwhile, the chancellor wants to make progress with improving airport capacity and with plans to introduce some road tolls to attract private investment into the trunk road and motorway network.
The idea of turning the Highways Agency into a Network Rail-style private company has also been mooted. However, Justine Greening, transport secretary, is understood to be opposed to the idea of road privatisation, believing it is an impossible political sell.
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