push the button on infrastructure to benefit brexit britain



push the button on infrastructure to benefit brexit britain
August 2016
Dithering about commissioning
critical infrastructure is as
British a pastime as queuing
and talking about the weather.
But, as the dust settles on the
result of the EU referendum, the
nation’s economic future could
well depend on whether or not
we commit to the right road,
rail and aviation infrastructure.
Without better transport, the
government’s best laid plans for
boosting regional growth and
safeguarding our position as
market of choice for business
and investment could be derailed.
While the long-term impact
of Brexit is still unclear, its
short-term impact is already being
felt. Financial markets dislike
uncertainty and the shock of the
referendum result – together with
the resulting political turmoil
and downgrading of the UK’s
credit rating – has hit investor
confidence hard. The impact on our
industry is already being felt, with
construction activity already
at a seven-year low.
to investor
could push us
towards the
prospect of
All this is happening against a
backdrop of the ongoing question
of runway capacity in the South
East; HS2 being forced to reinforce
its business case; and the Shaw
Report pointing the way to
significant changes in the structure
of the rail industry, which ORR will
start consultation on shortly.
In the energy sector, the
government’s eleventh hour
decision to delay final approval
for the UK’s first nuclear power
station for a generation at Hinkley
Point, despite securing critical
foreign investment not twenty
four hours before, is a significant
This apparent government
indecisiveness around our critical
infrastructure projects risks
fundamentally damaging appetite
to invest in UK infrastructure. Add
to this, recent headlines that cast
doubt over the future of other key
infrastructure projects such as HS2
and Crossrail 2 as well as delaying
the decision on runway capacity
in the South East, whilst the new
government takes its time to form,
suggests a dangerous pattern is
starting to form. The resultant
damage to investor confidence will
likely serve to push our country
further towards the prospect of
a damaging and costly recession.
The nation’s infrastructure
priorities have not changed just
because of the Brexit vote. The
same problems around mobility,
capacity, growth and economic
productivity persist regardless.
History shows us that
infrastructure has always been a
vital driver of growth. However,
it has also historically proven
a positive intervention during
turbulent times. While new
projects cost money, delays in
decision-making cost even more.
Even a six-month postponement
could create significantly longer
delays and substantial additional
costs. At the same time, their
ability to restore confidence and
generate long-term returns should
not be overlooked, provided a
coherent strategy of how they
relate to one another and the
purpose they serve. This does
not mean we should push ahead
without proper planning or
due process but making strong
commitments are powerful and
Now is not the time to batten down
the hatches. We simply cannot
afford for the uncertainty created
by Brexit to delay the critical
infrastructure projects that our
country needs. Strong investment
and bold decisions that support
our ability to trade globally and
leverage prosperity across the
country are the solution. Every
day lost in making these decisions
is a day that costs and introduces
potential risks.
Airport capacity expansion
and High Speed 2 are the two
infrastructure priorities that
government simply cannot afford
to lose time on. And, irrespective
of Brexit, London’s population will
continue to grow, which means
it is vital that Crossrail 2 is also
prioritised alongside building
aviation capacity in the South East
to enable our capital to remain
strong and competitive outside
of the EU.
In the aftermath of the
referendum, we could potentially
see several major airlines reassess
whether the UK remains an
attractive base, particularly if more
runway capacity is out of reach
compared with hubs within the
EU. In spite of this, the decision
on an additional runway for the
South East was delayed almost
immediately following George
Osborne’s declaration that the UK
remains “open for business” in the
days following the referendum.
Ryanair has already signalled it
plans to grow its operations at EU
airports, moving this away from the
UK in the wake of the EU vote, and
there is a risk that other carriers
may follow suit.
“The arguments
or Gatwick
must stop.
Long-term we
need both”
Any runway will take a minimum
of nine years to plan and build.
Therefore, delaying a decision
until late-2016 or even into 2017
could prove a deciding factor when
carriers reassess their European
hubs – a decision you might expect
them to consider in the near future.
Ambivalence is, therefore, not
an option.
The arguments around whether
we need to build at Heathrow
or Gatwick must stop. From a
long-term perspective we need
both. Gatwick is easier to achieve
so the smart choice would be
to build this first and open a
runway during 2025. Heathrow
is rather more difficult both from
an infrastructure and planning
perspective and will take longer
to achieve. The decision to build
Gatwick first would, therefore,
allow more time to bring Heathrow
on stream as a part of a much
longer term UK-wide aviation
strategy. Creating further aviation
capacity in the South East in
the long term should also be
considered, rather than waiting
for capacity to run out before we
commit to the long process of
planning new runways.
From now on, the UK will need
to rely heavily its heritage in
international trading, not just
with the EU. On this basis, the
expansion of regional airports in
the North will be equally important
as building capacity in the South
East. Plus, providing reliable,
high speed rail links between our
key airports would create access
between international markets
and the whole of the UK. This
approach would provide prosperity
on a national level but could also
help rebalance the strong regional
divides exposed by the referendum
The government must safeguard
and prioritise HS2. This ambitious
project has huge potential to act
as a catalyst for growth across the
country at a time when we need it
most. Government must also send
a clear signal that it will build the
full Phase 2 route or extend Phase
1 to Manchester with an eastwest HS3 route that will provide
critical supporting infrastructure
to underpin the Northern
Powerhouse agenda.
Interestingly, the devolution of
powers from Westminster may well
prove to have been timely, enabling
our cities to build more quickly
upon these national infrastructure
investments. This could be
important for initiating the desired
growth in the Midlands and across
the north of England, supported by
the recent formation of Transport
for the North.
HS2 will already connect to
Birmingham International Airport
and Manchester Airport so it would
logically follow that the option of
connecting HS2 to Heathrow via
Old Oak Common would complete
a strong network of airports and
high speed rail links.
Equally, prioritising the upgrade
of Brighton Mainline, potentially
with an earlier introduction of the
European Train Control System
as part of the Digital Railway
programme, would provide
vital capacity for commuters,
improving and strengthening the
link between Gatwick and Central
London. This is the only challenge
around the new runway plans at
Gatwick which, in themselves,
are self-funded. Furthermore, in
the capital, linking Victoria with
Euston and HS2 by pressing ahead
with Crossrail 2 would open up
new opportunities for regional
connectivity and improve mobility
within and into London from key
areas of new housing.
We can also maximise the
potential around aviation and
high speed rail hubs. These
node points – particularly the
HS2 stations at Euston, Old
Oak Common, Birmingham
International and Birmingham
Curzon Street, as well as the
Phase 2 stations, and at our key
airports – offer great opportunities
for investment, regeneration and
growth. Developing commercial,
retail and innovation hubs at
these locations fuelling the
fantastic entrepreneurial spirit
we have in the UK would add
significant value to our economy.
In particular, learning from key
growth economies, by coalescing
research and development around
these hubs where they are linked
to global markets will open up
and extend trading and growth
opportunities. We need to raise
our ambitions for these hubs using
private finance to support their
creation and use them as wealth
creators to attract significant
inward investment in the future.
The time for talking is over. If
“Brexit does mean Brexit” we
must show we are creating the
national infrastructure that will
support the UK in reaching out
to global trading markets. In turn,
this will help drive the investment
that these and future critical
programmes will require, fostering
longer-term growth, prosperity
and opportunities for all, as
well as re-setting the balance
between government and private
investment, and healing regional
Now is not the time for indecision.
The nation cannot afford
unnecessary delays to our critical
infrastructure projects that will
help us to emerge from Brexit
strong and prosperous and
mitigate shorter term economic
effects as we trigger Article 50 and
untangle ourselves from the EU.
Now is the time for government
to re-affirm its commitment to
these major infrastructure projects
and make some key decisions
that would be received positively
by financial markets. The Prime
Minster, who has already shown
that she is a bold and ambitious
leader, together with her new
government, must seize the
opportunity and should not lose
any more time in making these key
decisions. By slowing austerity and
investing in infrastructure, that
would support our new position in
the global economy, it would show
the world that Britain really
is “open for business”.
Chris Pike
Client Development Director Infrastructure
T +44(0)7921 492916
E [email protected]

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