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Business confidence on a high Infrastructure Intelligence survey reveals

Confidence is high in the infrastructure sector following the General Election with 69% of business leaders confident or very confident about its future in the UK

Infrastructure Intelligence Pulse

Results of the Pulse survey from Infrastructure Intelligence in association with global business software provider Deltek show that the government’s commitment to infrastructure, economic stability, more long term thinking and increasing inward investment are all contributing to high business confidence in the sector.

The survey of 164 business leaders in the infrastructure sector includes views from consultants, clients, contractors and suppliers. It follows the first ever Pulse survey carried out before the election in May in which business leaders showed they were overwhelmingly set to back a Conservative government with 49% planning to vote Tory.

"It is very encouraging to see that the industry remains so positive about the prospects for the future but it is clear that there is also a strong realisation that firms now have to deliver," Infrastructure Intelligence editor Antony Oliver.

The latest survey finds 59% of respondents are confident about the sector post election and a further 10% are very confident. Only 7% said they were worried.

“Post election the government has recommitted to its previous pro-infrastructure policies, avoiding any hiatus for projects, and furthermore has made a series of announcements which will drive even more infrastructure spend," said the CEO of a consultant pointing to the productivity plan, Northern Powerhouse and the willingness to embrace fiscal devolution as positive signs.“With business sentiment at a high, and UK economic performance well ahead of the rest of Europe, private money is pouring into the industry too,” he said.

Others said that the government understands that infrastructure investment will boost the economy. "Infrastructure investment should help raise GDP in the medium to long term, which is a fundamental part of helping to reduce the deficit. The Tories get this," said a consultancy director.

Economic stability too was a major benefit. "The stability and likely longevity of a Tory government has undoubtedly bolstered financial markets and investor confidence. This is already translating into more confidence in the private sector development arena, which is a catalyst for strong and sustained investment in infrastructure," said another consulting CEO.

Respondents pointed to schemes such as HS2, smart motorways, the Thames Tideway and Hinkley Point C nuclear power plant as examples of major infrastructure schemes that were moving ahead, but they expressed concern over potential spending cuts, cancelled rail plans and uncertainty over energy projects, particularly renewables.

“With business sentiment at a high, and UK economic performance well ahead of the rest of Europe, private money is pouring into the industry” UK engineering consultancy CEO

"I have strong concerns about new government position on renewables. This creates considerable uncertainty for the industry with implications for UK energy provision. This is the opposite of what is needed to maintain energy security and transition to a low carbon economy; the industry (and UK) needs policy stability and certainty for energy investment," said one consultant.

Such fears left 24% of respondents unsure about the future for UK infrastructure under the new government. "Whilst there is strong commitment to investing in Infrastructure, government bodies are being asked to review significant cuts between 25-40%," said the CEO of an engineering company. The impact of this had yet to manifest itself in the future workload pipeline, said respondents noting that when it did the position for the industry will become clearer.

Others said they expected the spending review to highlight how the government would move forward. "I am generally confident as there are opportunities, though the outcome of the CSR is likely to show that there will be some tough decisions required," said a consultancy director who also noted that there remained a highly competitive bidding environment and warned that low bids could affect long term delivery.

Only 7% said that they were worried or very worried about infrastructure. "A series of policy changes will negatively impact hugely on the renewables industry, various rail schemes appear to have been shelved and a new airport for London still seems a long way off," said a repondent from a law firm.

"A series of policy changes will negatively impact hugely on the renewables industry, various rail schemes appear to have been shelved and a new airport for London still seems a long way off," Law firm respondent

Fears were also expressed over client competency particularly in the rail sector. "It is vital for the industry that client organisations are properly staffed with competent, experienced and reasonable people; this is becoming the exception rather than the norm," said a contracting director who also expressed concern that Network Rail and London Underground were losing staff to HS2 degrading the resources available for current work programmes. Skills in general were also a concern. 

"There is much opportunity but potential problems with skilled resources in the supply chain to deliver and lack of client capability to take forward major programmes using efficient delivery methods which allow the supply chain to deliver best value."

Commenting on the survey findings, Infrastructure Intelligence editor Antony Oliver said: "It is very encouraging to see that the industry remains so positive about the prospects for the future but it is clear that there is also a strong realisation that firms now have to deliver."

"To do this will mean having and maintaining the necessary confidence to invest in skills, training and resources," he added. "The clear pressure that will be maintained on the public purse over the next five years cannot be underestimated nor the pressure that will come on infrastructure businesses to boost efficiency." 

  • A full survey analysis will appear in the September issue of Infrastructure Intelligence magazine
If you would like to contact Bernadette Ballantyne about this, or any other story, please email bernadette.ballantyne@infrastructure-intelligence.com:2016-1.