CBI and KPMG say creaking UK transport is major threat to recovery – and we need a new runway

Between May and July, the CBI and KPMG conducted their third Infrastructure Survey, with 526 companies interviewed. The CBI and KPMG say, as they have often said before, that they believe Britain’s economic recovery is being put at risk by continued Government inaction over energy and transport infrastructure. They claim there is growing dissatisfaction with the Coalition’s failure to take big decisions on airport capacity, nuclear power or new roads – despite ministerial rhetoric on the importance of such investment. The CBI wants to see a commitment in party manifestos to implement the findings of the Airports Commission on new runways – so far none of the parties have agreed to be tied to the Commission’s findings. They say that in the short term, improved road access to all the UK’s airports is essential, “boosting demand for existing capacity and making new routes more viable.”   The CBI has repeatedly called for Heathrow to be allowed another runway, claiming this is needed for links with new markets, and saying the UK needs a hub with space to grow.

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Creaking UK transport is major threat to recovery, say bosses

Business leaders attack Coalition ‘inaction’ on improvements to airports, roads and energy

A suggested short-term fix to Heathrow congestion would be to use the  runways for both take-offs and landings.

Overcapacity at UK airports is a problem 

By   (Daily Telegraph)

16 Sept 2013

Britain’s recovery is being put at risk by continued Government inaction over energy and transport infrastructure, with two-thirds of companies expecting the situation to get worse, a major new report http://www.cbi.org.uk/media/2360768/cbi_kpmg_infrastructure_survey_16_sept.pdf  says today.

The third annual survey of 526 business leaders from the CBI business lobby group and accountants KPMG finds growing dissatisfaction with the Coalition’s failure to take big decisions on airport capacity, nuclear power or new roads – despite ministerial rhetoric on the importance of such investment.

Britain is now languishing 24th for the overall quality of its infrastructure in the latest rankings from the World Economic Forum and business is not confident of any rapid improvement.

Around 65% of companies surveyed said they believed “government policies will have no impact, or even a negative one”, with Britain’s ageing energy infrastructure this year overtaking the creaking transport network as “the biggest future concern for businesses”.

Amid an ongoing stand-off between the Government and France’s EDF Energy over building the first new nuclear power plant in a generation – the £14bn Hinkley Point C – 77% of respondents said they were “not confident of improvements in energy infrastructure over the next five years”. For manufacturing companies, that figure rose to 86%.

The Coalition is now on its third incarnation of the National Infrastructure Plan, first published in 2010 and listing £300bn of projects.  In June Danny Alexander, Chief Secretary to the Treasury, unveiled a £100bn spending splurge to 2020.

However, CBI Director-General John Cridland said: “The Government has talked the talk on infrastructure for the last two years with too few signs of action. The faltering speed of delivery creates a worrying sense that politicians lack the political will to tackle some of the major issues head-on”. Richard Threlfall, head of infrastructure at KPMG, said there was a “fear amongst business that too many critical investment decisions are being pushed back to beyond the election”.

The CBI is calling for five practical steps to be taken in the next 18 months. They include the introduction of “capital allowances for the construction of infrastructure projects at the Autumn Statement” and a delivery plan for the road and rail projects identified in the Spending Review.

Mr Threlfall said he was particularly struck with the growing discontent over local transport links, with 49% of businesses voicing their dissatisfaction, up from 28% in 2011. The CBI also wants to see a commitment in party manifestos to implement the findings of the Davies Commission on new runways and for the Coalition to drive the Energy bill on to the statute book.

There was more optimism over Britain’s status as an attractive place for infrastructure investment, though it lags behind Australasia, North America and the Middle East.

Around 65% of Britain’s infrastructure is privately financed and the Government has made much of accessing the £1 trillion sitting in Britain’s pension funds. They currently invest just 1% – 2% of their assets in infrastructure. But, while the Government targeted an initial £20bn of investments, it is still struggling to achieve £1bn.

Paul Abberley, head of investments at Aviva, said he welcomed some Government initiatives, such as the £40bn guarantee scheme, but that it was still “really hard to get stuff off the ground in the UK”. He said the biggest “negative and positive” was Britain’s legal system.

“If you want to build a big box in a field in the UK, you need lots of commitment, patience and resources,” he said. “It’s painful. The UK gives every pressure group the chance to complain.”

However, he said that the same legal system also made Britain attractive to investors “because of the strength of contract law”.

Mr Abberley added that Aviva currently has less than £1bn of its £230bn funds, excluding America, in UK infrastructure, with one barrier to investment being the absence of a proper pipeline of projects.

“If you look at the National Infrastructure Plan, is that an actionable plan or just a list of stuff we need?,” he said.

http://www.telegraph.co.uk/finance/newsbysector/transport/10311099/Creaking-UK-transport-is-major-threat-to-recovery-say-bosses.html

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The report is  Connect More,  (47 pages)

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Earlier:

CBI, aviation industry, BAA etc say (again …) UK will become a branch line without Heathrow 3rd runway

18.4.2012The Chief Policy Director of the CBI says “The UK is becoming a branch-line destination on the route map of global airlines.” And for some reason she feels the need to also say that “Such is the threat to the UK’s prominence that Dubai is set to overtake Heathrow by 2016 as the world’s largest international airport.” So what?  Dubai is more centrally located than London for global traffic.  She also fears Heathrow will be overtaken by Paris or Frankfurt.  The director of airline Etihad says (surprise surprise) “Heathrow will not be able to compete unless it opens another runway.” That’s because he wants two more flights per day to  Dubai. And BAA boss Colin Matthews will unveil new research showing 53% of airlines are increasing their flights out of other countries due to the severe capacity restraints at Heathrow. And more along those lines ….

http://www.airportwatch.org.uk/?p=1718

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Head of CBI backs Heathrow 3rd runway while CBI wants all parties to sign up to Commission’s recommendations in advance

20 July 2013

Sir Mike Rake, the new president of the CBI, thinks building a 3rd runway at Heathrow is a “no-brainer” and that the Government should get on with increasing aviation capacity immediately. The CBI has always backed massive aviation expansion, rather predictably. He said: “Despite the fact I live near there, I think we should have started a third runway several years ago and I think other projects should follow from that.”  He admitted that Heathrow is not the only option and also called for a 2nd runway to be built at Gatwick. “We need to decide quickly and get on with it,” he said.  His personal views appear to be slightly at odds with the CBI itself.  On Thursday, the CBI released its response to the Airports Commission into airport capacity, stressing that it was open to whatever solution could gain cross-party support and lead to speedy growth. They said all three major parties must sign up to Commission’s recommendations in advance, to avoid going back to square one in 2015. The CBI remains the only business group that does not unequivocally back an enlarged Heathrow as the way to deliver the alleged economic growth.

http://www.airportwatch.org.uk/?p=3881

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and there have been many other calls by the CBI for action to expand Heathrow – some at the link above.

 

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