|
Infrastructure projects need to demonstrate that they will improve the future growth prospects of the UK. This is the key finding of an ACE review on the funding of infrastructure. The report makes the case for funding by looking at projects over the past decade.
The report argues that infrastructure projects must be economically efficient, targeting bottlenecks and inefficiencies within the existing systems.
Nelson Ogunshakin, ACE chief executive, said: “Investment decisions are complex and expectations surrounding future market conditions are often inaccurate. Despite the continuing improvement of modelling techniques over the past 30 years, and the attempt to further account for items such as special effects, not all information can be included within a model. These models have to be a ‘correct fit’ to provide an accurate representation of the conditions you seek to predict, and whilst we have come a long way in terms of statistical analysis and econometric techniques, calculating the ‘future benefit’ for any given project still remains complex.”
ACE's report adds further weight to the return infrastructure investment can provide. In terms of targeting investment the report demonstrates that directing funds to smaller ‘congestion relieving’ projects is vital to remove congestion and bottle necks within the UK’s current system and can provide significant returns. Larger projects do not always provide the best cost benefit ratios. Unlike smaller projects they are more likely to secure and substantially increase long-term capacity.
Nelson Ogunshakin added: “The evidence of the report suggests that consistent infrastructure investment will maintain the competitiveness of an economy, investor certainty, access to capital, account for externalities and market failure, and creating a satisfactory regulatory environment.”
-ENDS-
For press information please contact Simon Goldie on 020 7227 1892 or 07905 279328 – sgoldie@acenet.co.uk
Notes to editor
To read the report, please click here.
Other key points from the report:
ACE's latest report reviews and analyse a range of material that is openly available (such as economic papers, cost benefit analysis and case study evidence) in an attempt to ascertain what effect infrastructure investment has on the economy. The economic rationale behind investment decisions has not been as important as it is during this economic cycle given the recent recession, tightening credit conditions and proposed public sector cuts. Within the report we review data available within the construction sector to determine the market size and the mechanisms that surround the investment decision.
The UK ranked within the top 20 for infrastructure in only one category (quality of electricity supply) potentially meaning that we are in an unfavourable position when considering our direct competitors in the G8 and G20. The other categories included the quality of overall infrastructure, quality of roads, quality of railroad infrastructure, quality of port infrastructure and the quality of air transport infrastructure.
|