Lack of infrastructure investment could leave Britain in the dark

Tom Bawden@BawdenTom
Monday 10 October 2011 15:56

Britain faces a very real chance that the lights could go out in the next five to 10 years, as its ailing energy infrastructure struggles to attract the massive investment needed to ensure a reliable electricity supply, according to a warning by the CBI.

Companies named the potential absence of a secure, affordable energy supply as their biggest concern in a damning report published today by the employers' organisation and KPMG.

The report also finds that the UK's road and rail systems are falling further behind the EU average, while 58 per cent of respondents said that, overall, the country's infrastructure is more expensive, less reliable and inferior to that of the Continent.

It notes a clear deterioration in many aspects of Britain's infrastructure in the past five years, with potentially serious consequences for the economy.

The CBI's director general, John Cridland, said the task of revitalising Britain's infrastructure fell to the private sector, since it was vital to keep the country's AAA credit rating by cutting the public deficit. He urged the Government to think creatively about ways to unlock the billions of pounds held on companies' balance sheets to kick start a much-needed infrastructure financing revolution.

The Government could start with a boost to Britain's inadequate road system, by introducing a toll charge on the A14 around Felixstowe and extending the existing 27-mile Birmingham to Wolvehampton toll on the M6 up to Manchester, Mr Cridland said.

A massive influx of infrastructure investment would feed through into associated orders for parts and support services, enable UK plc to improve productivity and attract more business from overseas, he added.

Particularly pressing is the need to invest an estimated £200bn in power stations and other energy infrastructure in the next 10 to 15 years, to satisfy growing demand for power while meeting ambitious targets for reducing CO2 emissions and increasing renewable generation.

Some 89 per cent of the 447 UK businesses interviewed for the CBI report – which covered companies of all sizes and sectors of the economy – are concerned about energy supply over the next five years, while 95 per cent are worried about its cost.

Mark Elborne, the head of a new CBI board to lobby the Government as it prepares to publish in November a more detailed, updated version of its 2010 UK Infrastructure Plan, said: "If the Government falters, or there is a lack of determination, there is clearly a risk that there will be insufficient [energy] capacity to meet the needs of the UK by 2020."

Businesses cited the need for the Government to set a clear overall strategy to improve infrastructure. Mr Cridland said the Government was right to be spending a reduced 1.25 per cent of GDP on "public sector capital" to tackle the deficit, but said it should aim to restore pre-recession levels of 2.25 per cent as soon as it can.

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