There has been little Government support of infrastructure investment and more can be done to promote opportunities in the UK, the CBI has claimed.
In its report Attracting Investment to UK Infrastructure, the CBI identified four key alterations that would encourage long-term institutional investment, especially in greenfield projects.
The credit rating for specific projects should be lifted above investment grade (BBB-), the CBI outlined. It was suggested that improvements made in credit ratings across several projects at a time would allow infrastructure to compete with other asset classes.
The report also said that the Government should encourage pension funds to invest in infrastructure, including with the establishment of a dividend tax credit targeted at new projects.
The public sector approach to infrastructure should be commercialised by installing, what the CBI term as, a single shop window to attract infrastructure investors.
The CBI emphasised that the Government needed to ensure that Solvency II did not act as a barrier to private investment.
John Cridland, CBI Director General, said that the report highlighted the significant work the Government needed to undertake to elevate UK infrastructure from its current World Economic Forum ranking of 28th.
‘With banks and institutional investors, including pension funds, working together to find new ways to fund infrastructure development, the Government must play its part by removing hurdles, and acting in a more commercial, investment-savvy way,’ he said.