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Business leaders tell government to ‘act now’ on transport

17 Sep 12 UK business is calling on the government to step up its investment on infrastructure construction, with the message that there has been enough talking and it is now time to act.

Businesses are concerned that critical infrastructure improvements are not happening quickly enough. That is the main finding of the second annual CBI/KPMG infrastructure survey, Better connected, better business, published today.

Responses from 568 business leaders during June and July identified transport infrastructure as the area of greatest concern. Nearly three-quarters of firms do not expect to see any improvement in transport infrastructure during the next five years.

The findings show that businesses see the quality and reliability of the UK’s transport networks as more important to their investment decisions than any other infrastructure.

Nearly two-thirds (61%) of companies think the UK’s infrastructure is less favourable than elsewhere in the EU, and 43% say it is worse than in other developed economies outside the EU.

Richard Threlfall, KPMG UK head of infrastructure, building and construction, said: “Actions speak louder than words, is the clear message of this year’s CBI/KPMG infrastructure survey. Business confidence in our infrastructure appears to be ebbing away. The key issue is how quickly can recent policy announcements translate into investment on the ground.

“We’ve seen real improvements in our digital infrastructure, but there’s continuing uncertainty over energy and transport investment. Everyone understands that the government is constrained financially. But the right government interventions will encourage the private sector to invest.

“The launch of the UK Guarantee programme is welcome but it now needs to be implemented quickly. House building offers the fastest-acting pain relief for our economic headache. In addition, we need to re-introduce tax relief for investment in buildings and structures.

“The need for investment is enormous and individual schemes can be controversial. Delay is often attractive. But only by investing today will we create jobs, drive growth and remain competitive in the global economy. Now is the time to act.”

A more recent snap poll suggests 60% of businesses think the new UK Guarantees scheme will help to boost investment, kick-starting infrastructure projects and getting diggers on the ground.

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CBI director-general John Cridland said: “The government has shown it gets how important infrastructure is to the economy. It has put the framework in place but needs to show it can deliver on the ground.

“The new UK Guarantees are seen as positive by businesses, but firms fear initiative overload and are becoming impatient with delivery, leaving many companies still sceptical about the overall impact on investment.

“Whether it’s aviation capacity, electricity markets or funding our roads, the government needs to take some big decisions which will have a major, lasting impact on inward investment and businesses’ ability to compete overseas.”

While many firms (61%) are happy with their links to domestic markets, there is a considerable amount of variation between regions. Whereas in London, 77% of companies are satisfied with the UK’s domestic networks, in the West and East Midlands 59% are unhappy with the quality of their UK connections.

Mr Threlfall added: “Whilst many of the findings this year are encouraging, businesses outside London are much less confident that they have the infrastructure they need.”

The local road network is seen by two-thirds (65%) of businesses as being in decline, with congestion and a lack of investment identified as the main causes.

The railways fared better, with nearly half (45%) of companies seeing improvements to intercity rail connections in the past five years, and a positive balance of firms (+64%) believing the planned High Speed 2 line would have a positive impact on their ability to grow.

How different modes of transport interconnect is a major issue for companies, however, and one where very little improvement has been seen over the past five years.

Almost unanimously (97%), firms say the UK’s planning system is a barrier to delivering new infrastructure. Companies are split on the likely impact of the government’s planning reforms, with 45% believing they will have a positive impact, but 48% saying they won’t make a difference.

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