More private finance needed to fund UK infrastructure projects

The UK's Construction Products Association (CPA) has emphasised the essential role private finance has in providing funding for infrastructure and other public sector assets, especially considering the current constraints on public sector spending in the coming years. The statement comes on the back of the Treasury's recent PFI Review.

Michael Ankers, the CPA's chief executive, said: "It is essential to find innovative ways of tapping into private sector finance through, for example, pension funds, sovereign wealth funds and road toll charges, so as to help deliver the economic infrastructure that is essential to underpin the growth that we need to turn the economy round."

The association also pointed out the need for:
• greater use of private finance in the future provision of social housing
• more focus on output-based specifications which will encourage incentives for manufacturing partners linked to the outputs of the contract
• early involvement of key manufacturers and suppliers in projects so that full advantage is taken of the opportunity to deliver innovative products and solutions that will deliver value throughout the life of the project
• much more information about the performance of assets in use and the costs of maintaining them. This will help set benchmarks that can be used in evaluating future project proposals.

The CPA also reaffirmed its pessimistic outlook on the UK's construction industry going forward quoting an ONS report that states construction output fell 0.5% in the 4Q11.

Noble Francis, economics director at the CPA said: "The trend in construction output is clearly still downwards at a time when government acknowledges that construction is one of the sectors necessary to help the economy avoid slipping back into recession. Overall these figures only serve to reinforce our concerns about the prospects for the industry over the next 18 months.

"‘The Association’s latest forecasts suggest that construction output will fall by more than 5% during 2012 and there will be no significant recovery in the industry until 2014. This year will see a dramatic 14% fall in public sector construction as spending cuts begin to bite. The real concern, however, is that private sector construction is not recovering fast enough to offset this and will fall further during 2012, with the private commercial sector 5% lower than this year."