Back in June we evaluated the impact Brexit would have for the infrastructure sector. We predicted the impacts would generally be good for the sector as history suggests governments tend to invest in infrastructure as a means of stimulating economic growth and providing some economic certainty. We forecast that existing projects in the infrastructure delivery plan would continue and that further investments would be announced.
Chancellor Philip Hammond’s Autumn Statement showed, as we anticipated, that the government’s treatment for the country’s Brexit woes centres mostly on infrastructure – continue with the current plan and provide additional investment for key enablers of innovation and productivity. However, the medicine will not necessarily be spread around the infrastructure sector equally.
Housing is the big beneficiary with exchequer funding for much needed additional homes, including some 40,000 affordable homes. Telecommunications also came up trumps and gains additional funds to push ahead with the infrastructure needed to deliver Fibre to the Home and 5G, with broadband now seen as an essential utility for competitive economies. Transport will get some additional investment in road pinch points, low emission cars and digital signalling for our railways – although it could be argued we’ve already committed in previous budgets to digital signalling.
However, there was no explicit mention of any additional investment in energy. This sector could perhaps syphon off some of the innovation funds for renewable energy or energy storage initiatives. The energy sector may also make a play for some of the additional funds being allocated to the various local enterprise partnerships across the regions by focusing on local energy needs. On the subject of regional investment, the autumn statement did not include any additional funds for the Northern Powerhouse, although there was a teaser that further details would be coming in due course and government reiterated its commitment to the Northern Powerhouse Investment Fund (NPIF). Whether further detail will be in one of the two budgets in 2017 or be announced outside of the budgets is anyone’s guess.
Another interesting element of the Chancellor’s Autumn Statement is that all of the additional funding would appear to come from government borrowing, though the Chancellor did take the opportunity to remind us that the UK Guarantees Scheme still exists and is open for business. Frustratingly for the industry, announcements about the often mooted pipeline of PF2 projects have been deferred to next year. With speculation that it will include smaller projects in the social infrastructure space and may even be adopted by the MOD.
We now know the Brexit medicine the government is prescribing, but given the uncertainties in the PF2 pipeline it looks like some will have to wait until the next Budget or beyond for their spoon full of sugar.