Darryl Murphy, Aviva Investors: “Infrastructure faces a great challenge of funding”


infrastructure faces a great challenge of funding it’s not financing, it’s actually who’s going to pay for it and the answer is you and I as a consumer or as a taxpayer and until we really grasp that and find new sources of funding our general ambition to invest in infrastructure won’t be met I think the UK has a lot of detractors in terms of
its infrastructure delivery in reality it’s actually quite good if we look back
we’ve delivered over 700 projects using PPP many of whom don’t really get the
recognition that they deserve and that today as we look out we can see with delivery
of mega infrastructure projects which are being delivered on time and on budget
we need to find new ways of funding infrastructure particularly using assets
that maybe the public sector already has such as maybe the value of land that
increases particularly when transport projects are invested an example being
such as cross rail or future cross rail 2 so overall we need to find these new
ways of delivering more value from what we’ve got if I had a billion pounds I’d
probably select a project that are like to invest in and really that would be
swansea tidal lagoon that’s a very interesting project obviously it’s very
low carbon and it’s the forefront of a technology that could be used across the
UK I think the public sector can do more to help deliver infrastructure more
quickly particularly about how it prepares projects we need to do more up
front in order of thinking through funding models and procurement models so
then they can go to market and get to actual delivery in a shorter period of
time infrastructure is an ideal asset for investment particularly for pension
funds and institutional investors it provides long term stable cash flows
often which are index linked and also it provides a relatively low level of risk
for a reasonable level return I think PPP PFI has to really come back in terms
of project delivery in the UK we’ve had a number of years accessible delivery
and then politically it became unacceptable
there are signs now that government is willing to embrace this on
perhaps a more pragmatic basis and that can only be a good thing
the largest bottleneck to the infrastructure industry it’s very much
around certainty of projects and programs we’ve gone a number of years
with lots of plans but lack of actual granular detail in terms of what’s going
to be delivered and therefore the industry is struggling a little bit to
invest into the future central government has become very focused on
important large-scale mega projects a lot of our day-to-day infrastructure has
to be delivered locally in cities or in regions devolution potentially offers
a route to provide funding therefore those projects can come to life what I’d
like to see is local authorities developing local infrastructure plans
such as we have in London to enable a forward-looking investment program

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